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Treasury likely to lose budget-making function

The National Treasury building in Nairobi.
The National Treasury building in Nairobi. FILE PHOTO | NMG  

Attempts to set up an Office of Management of Budget (OMB) have been reactivated at the Office of the President with a view to pushing for the execution of the Big Four agenda, an insider has said.

The separation of the budgeting role from that of the financial affairs of individual ministries is also being discussed in the context of the need to achieve the economic growth targets.

The OMB proposal has been discussed in the light of threats to the sustainability of public debt, which is currently approaching 60 per cent, said economic adviser in President Uhuru Kenyatta’s executive office Mbui Wagacha.

Public debt exceeded Sh5 trillion over a month ago, even as the total nominal gross domestic product remained below Sh8 trillion. The debt in terms of its present value (relative to its future value) is estimated to be just about 60 per cent – the highest level in more than a decade.

“The proposal to set up an OMB has been discussed within the Office of the Presidency, having considered the need to ensure execution of what is budgeted and oversight. It is also to ensure that development spending is maintained within the 30 per cent target of total spending to ensure implementation of the Big Four agenda,” said Dr Wagacha.

The agenda involves universal healthcare, affordable housing, promotion of manufacturing and ensuring food security through improved productivity in agriculture.

Dr Wagacha said the increase in recurrent expenditure while development spending falls in relative terms was one of the trends that needed to stop.

The OMB would be in a sense be fashioned in the way a similar office is organised in the US where the Treasury is a separate entity. In Kenya, the idea would be to have the Treasury serve as a Ministry of Finance charged with the responsibility of managing debt, payments and accounting issues. With the budgeting burden removed, the Ministry would be expected to perform much more effectively as compared to the current situation where it is overwhelmed with responsibilities.