Economy

Development spending, counties hit hard by Sh55bn budget cut

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Treasury secretary Henry Rotich. FILE PHOTO | NMG

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Summary

  • Treasury secretary Henry Rotich has slashed development budget by Sh34.33 billion in the mini-budget to be debated by the National Assembly tomorrow, dimming economic growth prospects and slowing down creation of new job opportunities.
  • Project spending for the year ending next June is set to drop Sh642.90 billion from initial Sh677.23 billion.

Development projects are the most affected in the Sh55.09 cut in the budget proposed by the Jubilee administration to fill the hole left following changes to proposed taxes including halving of 16 per cent levy on petroleum products.

Treasury secretary Henry Rotich has slashed development budget by Sh34.33 billion in the mini-budget to be debated by the National Assembly tomorrow, dimming economic growth prospects and slowing down creation of new job opportunities.

Project spending for the year ending next June is set to drop Sh642.90 billion from initial Sh677.23 billion.

The proposals will affect capital projects not directly related to the ambitious Big Four plan, which covers manufacturing, affordable housing, universal healthcare and food production.

The expenditure plan, if approved by the National Assembly, will see the Treasury spend Sh227.72 billion more on servicing the rising public debt than what State ministries, departments and agencies will spend on development projects.

The biggest losers in the development budget cut are departments for gender affairs and petroleum whose spend has been shaved by Sh2 billion and Sh1.5 billion, respectively.

“Pursuant to the provisions of the Constitution and the PFMA (Public Finance Management Act) 2012, the Cabinet Secretary has received the amendments of the Finance Bill from Parliament amending some tax measures which have financial implication on the budget estimate,” Mr Rotich says.

“As a result we have prepared supplementary estimates No. 1 of FY 2018/19 rationalising the expenditure to the extent of the revenue shortfall due to amendments in the Finance Bill approved by Parliament.”

Allocation to counties have been reduced by Sh9.04 billion to Sh304.96 billion, a move likely to hit non-priority devolved functions.

Overall, the 2018-19 budget has been cut to Sh2.97 trillion from Sh3.03 trillion initially.

The Parliament has been the hardest hit with Sh5 billion budget shave in the overall budget to Sh31.83 billion.

This comprises Sh2.65 billion cut in National Assembly budget to Sh19.21 billion and Sh2.35 billion for Parliamentary Service Commission to Sh12.62 billion.

“The resources are extremely scarce,” Treasury PS Kamau Thugge said last Thursday, emphasising that every ministry or department will have to justify the Big Four component for very it requests from the Treasury.

“We have quite significant amount of non-discretionary expenditure that has to be funded.”