Uhuru approves supplementary Ksh.73.4 billion budget

President Uhuru Kenyatta has signed into law the Supplementary Appropriation Bill (No.2) of 2019 paving way for the release of Ksh.73.4 billion from the government’s consolidated fund.

The signing of the appropriation bill into law will see the government’s net spending bloat by a further 3.5 percent from the original approved estimates of Ksh.1.928 trillion earlier in the year with the new spend being pushed into further development expenditures.

The new funding is set to impact Ministerial and State Department (MDAs) budgets as the government agencies register varying adjustments in allocations.

However, only Ksh.54.3 billion of the Ksh.73.4 billion will be spent after Parliament approved cuts amounting to Ksh.19.1 billion represented in Treasury’s original proposal.

At the same time however, some of the downward re-calibration in ministerial appropriations relate to frozen expenditure related to projects under the scrutiny of Parliament including the allocation to the Integrated Identity Management System popularly known as Huduma Number and the controversial payments to the Lake Turkana Wind Power (LTWP)

Oliver Twist

The signing of the first supplementary budget into law follows the completion of a complex budget making process which was largely mirrored by the battle by MDAs to hold on to their original allocations.

From the get go, Treasury has sought to raid Parliament and the Judiciary for a combined Ksh.11.4 billion while pushing more funding towards the Universal Health Coverage (UHC) program and the State Department of Infrastructure.

The proposal however warranted a major backlash from the Judiciary and Parliament as the pair lamented the reduction of key appropriations to the execution of justice and the implementation of programs such as the Constituency Development Fund (CDF) respectively.

The Parliamentary Budget and Appropriations Committee (BAC), however, reigned in on Treasury’s proposal by reinstating both Parliament and Judiciary budget but for a combined Ksh.2.1 billion in minimal recurrent cuts.

The BAC would subsequently direct all allocations to the UHC program to conditional county transfers while slashing key infrastructure appropriations including those due to the JKIA-James Gichuru express way and food facility feeder roads.

Wider budget deficit

Uhuru’s increase of the 2019/20 budget is expected to result in widened fiscal deficit with financing disclosures still leaving a hole of Ksh.31 billion.

Of the new Ksh.54.3 billion in new spending, the new appropriation only yields new financing equalling to an estimated Ksh.23.8 billion in ministerial aid and appropriations.

As such, new borrowing is likely to be the only plug to the gap to almost guarantee of a subsequent supplementary budget in March or April 2020.

Revenues have meanwhile failed to hold firm in the financial year to date to point to an increasing risk of missed collections.

Net collections to September 30 were for instance off the mark by Ksh.73.9 billion to represent missed tax targets by the Kenya Revenue Authority (KRA) by Ksh.60.2 billion and a Ksh.13.7 billion slack in ministerial appropriations in aid (A-I-As).

Treasury Cabinet Secretary Ukur Yatani has however moved to shove up revenues through the targeting of Ksh.78.7 billion in ‘idle’ cash mop-ups from State Corporations and autonomous government agencies (SAGAs).

Further, the National Treasury has raised Ksh.26.2 billion from development partners while seeking out cheaper concessional funding from multilateral sources to fund the widened deficit at conservative costs.