Kenya Treasury’s budget plan sets aside Sh160bn for counties

Kenya’s 47 counties are set to receive Sh160 billion out of this year’s national Budget outlay of Sh1.2 trillion, ushering the country into a devolved economic system provided under the Constitution.

The Budget Policy Statement (BPS) tabled in Parliament on Tuesday by the assistant minister for finance, Oburu Odinga, shows the 2012/13 expenditure estimates will be Sh69 billion more than this year's figure.

County governments will take up 16.2 per cent of the Budget, in line with the Constitution which sets a minimum allocation of 15 per cent to the devolved units.

The Budget projects one of the lowest revenue deficits in recent years, showing growing concerns about the rising public debt amid pressure to finance an ever-expanding national budget.

The Treasury factored in a total deficit of Sh167.4 billion, a 29 per cent drop from estimates of the current financial.

“It is a delicate balancing act. We want to ensure that we support development projects and Constitution implementation programmes but at the same time avoid running unsustainable deficits,” said Henry Rotich, the deputy director of economic affairs.

The deficit will be financed through net domestic borrowing of Sh106.7 billion—a slight drop from this year’s Sh119.5 billion-- and net foreign financing of Sh60.7 billion.

The 2012/13 national budget represents a 6.4 per cent increase over the current year’s gross estimates, compared with a 33.4 per cent jump in the previous year.

The bulk of county funds, Sh59.4 billion, will go into energy, infrastructure and ICT sectors.

The second largest allocation of Sh32.9 billion will go to health and the third largest of Sh28.1 billion will go to public administration and international relations.

The county budget allocation amounts to 26 per cent of the most recent audited revenues of 2010/11.

Total government revenue ordinarily includes income tax, value added tax, customs duties and other duties on imports and exports, excise tax and any other tax or duty authorised by an Act of parliament.

“Pending agreement on a revenue sharing formula, which would allocate equitable share between the 47 counties, the cost of delivering assigned functions in each county can serve as a basis for the initial distribution of revenue,” said the Budget Policy Statement.

The statement said that a relatively larger percentage of resources would be allocated to those counties that have been left behind in terms of development or in terms of per-capita allocation of revenues.

According to the 2012/13 expenditure statement, the highest expenditures will go into education and infrastructure that will each take about Sh230 billion.

Governance, justice, law and order will take the third highest allocation of about Sh121 billion.

Implementation of the constitution and strategic interventions in education, health, infrastructure, tourism, security and agriculture will receive additional resources out of savings in the year or realisation of additional funds in the course of the year.

The Budget Policy Statement and the Supplementary Budget were tabled in the House even as the government was fighting with parliamentarians to approve the withdrawal of Sh39 billion from the Consolidated Fund to finance government services until the end of June.

MPs took Dr Odinga to task over failure to table the Policy Paper by March 21, 2012 as required by the Constitution.

Speaker Kenneth Marende promised to issue directions with regards to the failed timelines, as the Budget Committee complained that it was being held at ransom by failures of Treasury to follow constitutional timelines regarding budget process.

Mr Marende said the motion seeking withdrawal of Sh32 billion to meet recurrent expenditure and Sh7 billion for development as contained in the supplementary budget will only proceed after issuing directions on Wednesday afternoon.

MPs also protested the delay in approval of the Finance Bill 2011 and demanded that the speaker ascertains that MPs will only proceed to debate the supplementary budget based on the Finance Bill of 2010.

“Under which basis are you presenting the Supplementary Budget when the Finance Bill 2011 has not been approved by this House?” asked Kisumu Town East MP Shakeel Shabir.

Treasury has twice withdrawn the Finance Bill- which gives government the legal mandate to tax Kenyans-for fear that MPs will make amendments to control interest rates at four percentage points above Central Bank Rate in a move aimed at protecting borrowers from commercial banks loan charges.

READ: Kenya parliament gives ultimatum over Finance Bill

Budget Committee Chairman Elias Mbau insisted that the supplementary estimates should be able to show to what extent it was informed on what could have accrued if the House had passed the Finance Bill.

“We need to ensure clarity that the proposed supplementary budget was informed by either 2010 or 2011 finance bills before we proceed,” Mbau added as he lamented that the delay in tabling of BPS will make it impossible for MPs to dissect, analyse and provide recommendations that will be incorporated in the 2012/13 budget which is to be tabled at the end of this month in line with the constitution.

“As you give guidance, give us direction as to what ministers are supposed to do when they cannot live within timelines and still decide to send us on recess to allow time to lapse before tabling the said documents,” Dr Nuh Nassir pleaded with the Speaker.

Gwassi MP John Mbadi said the Fiscal Management Act gives ministers a window to table BPS after a week if the House is on recess but added that clause 8 (2) stipulates that the relevant committee shall consult each departmental committee and recommend to the House its report by April 15.

“We have violated the provision of the Act, what will the budget committee do to meet its deadline of April 15 which date is cast in law? We have to make suggestions for incorporation in the Budget which we expect to get within 13 days. Is this a move to make parliament a rubber stamping body?” asked Mr Mbadi.

Garsen MP Danson Mungatana reminded Treasury that the process of budget making is a shared process between the House and the Executive.