Budget hiccups loom if polls are held in 2013

One of the biggest debates around the Constitution and its implementation centres on the date Kenya can go to the polls.

While the High Court’s ruling on this matter has generated considerable political debate, it would be useful to evaluate how the country’s budgetary process could be affected by a March 2013 general election, assuming that the governing coalition is not dissolved for a December 2012 election. A December 2012 election would be more the norm and one would expect few budgetary challenges, if any.

Not so for a March 2013 election.

First, Article 221(1) requires the Cabinet secretary responsible for Finance to submit to the National Assembly estimates of revenue and expenditure of the national government for the next financial year at least two months before the end of each financial year.

The financial year ends on June 30. Therefore, the Cabinet secretary for Finance must at the very latest, table these estimates by April 30. Naturally, these estimates take months of preparation. If the election is held on March 9, 2013, the MPs, who must be sworn in before the Cabinet is established to facilitate parliamentary confirmation hearings, are likely to start their term in late March.

Therefore, the earliest we can expect Cabinet secretaries is end of March, leaving little time for one in charge of Finance to familiarise with the estimates before tabling.

Tied to the above and while obviously the technocrats in Ministry of Finance will have prepared these estimates, we are likely to end up with a set of budgetary proposals, good or bad, based on the priorities of the exiting Executive.

The incoming Executive will have little choice but to implement its predecessor’s economic policies in the next year. The incoming Executive might, therefore, find itself literally held hostage to policies and proposals which fly in the face of much touted manifestos and stated action plans.

It is also possible country could have budgetary proposals that significantly depart from the estimates of revenues and expenditures as the Executive lives up to promises of better public service or reduced taxes.

Another area of concern would be Customs. Customs proposals are a delicate affair as these are normally deliberated on and negotiated months before the budget speeches for the five East African Community (EAC) member states.

Traditionally, the East African countries budget speeches have been read on the last Thursday before the 15th of June. With a March election date, Kenya is likely to have two different ministers representing it at the Council of Ministers, which is EAC’s policy formulation making organ.

Whether a change of leadership at the Finance ministry at that stage is likely to affect negotiations on customs duty policies and rates is one we shall soon find out. But my guess is that we are likely to face challenges of synchronising the EAC changes in 2013.

Campaign mode

Lastly, even when we have had elections in December, most ministries have been unable to fully use their budgetary allocations and usually not for want of projects to finance. Although one could argue that the incumbent Executive will have an additional three months to spend its budgetary allocation, the converse could also be true.
For starters, upon expiry of the current MPs’ term, the country goes into a campaign mode and not much will get done.

The incoming government may also choose to start afresh and not carry out existing projects to completion.