Treasury Cabinet Secretary Njuguna Ndung’u last week tabled in the National Assembly the supplementary budget for 2023/24.
The mini-budget saw the development budget cut even as total spending increased by Sh187.3 billion on account of higher debt repayment obligations and additional spending needs on education. Consequently, the size of the budget swelled to Sh3.93 trillion from the initial estimate of Sh3.74 trillion.
But what does the new supplementary budget say about Kenya's spending priorities?
Ideally, the National Government can only spend money that had been appropriated— or simply set aside for a specific purpose — by Parliament. But that is not always possible because emergencies arise resulting in expenditures that had not been appropriated.
Article 223 of the Constitution allows spending money that had not been appropriated by Parliament under two circumstances. First, if the amount appropriated is not enough or in case of an emergency which calls for additional funds. Second, if the money has been withdrawn from the Contingencies Fund.
Section 44 of the Public Finance Management Act requires the government to submit to Parliament for approval, a supplementary budget.
The National Government can’t spend under Article 223 more than ten percent of the sum appropriated by Parliament for that financial year. For that to happen, the National Government has to seek the approval of Parliament.
Is this President William Ruto’s first supplementary budget?
No. This is the third supplementary budget. However, it is the first one in President William Ruto’s first budget for 2023/24.
In 2022/23, the Ruto administration came up with two mini budgets, mostly aimed at infusing some of his campaign promises such as the Hustler Fund and fertiliser subsidy into the country’s spending plan.
What informed the changes in the budget?
The latest supplementary budget, said Prof Njuguna, seeks to consolidate some funds to settle carryovers and pending bills from the previous fiscal years.
It also provides additional funding for emerging priorities as well as emergencies.
Who benefits from these changes?
Education, Agriculture, and Security are some of the major winners in these budgetary changes. The education received the bulk of the additional allocation in the supplementary budget.
The additional allocation of Sh62.1 billion will largely cater for multiple shortfalls in the capitation of the docket. The money will go towards replenishing the Higher Education Loans Board (Helb) and Open University, recruitment of tutors for the new junior secondary schools and the new funding model for technical vocational education training.
The Crop Development department has been awarded Sh10.1 billion pushing its allocation for the current financial year to Sh41.3 billion. A big chunk of the additional allocation — Sh8.25 billion— goes to the fertiliser subsidy, a pet project of President Ruto's.
Other beneficiaries of the additional Sh10.1 billion include post-harvest management (Sh2.14 billion), the establishment of the National Cereals and Produce warehouse (Sh470 million) and emergency response against locusts (Sh230 million).
The Internal Security & National Administration has been allocated an additional Sh7.94 billion, with Sh6.1 billion going to development. The other Sh1.84 billion is for recurrent expenditure.
The National Police Service Modernization Project has been awarded Sh6.5 billion more for “specialised plant, equipment and machinery.”
The Petroleum Department got Sh4.47 billion for fuel stabilisation.
Who are the losers in these changes?
There were cuts with development losing Sh41.96 billion.
In the Estimates tabled in Parliament in June, development expenditure got Sh807.6 billion, but has now been reduced to Sh765.7 billion.
The biggest casualty was the roads which lost Sh20.7 billion, housing (Sh3.3 billion) and Hustler Fund (Sh5 billion).
What is the impact of the changes changes?
Overall, the government hopes they will help them stay the course in stimulating the economy at a time the Kenya Revenue Authority (KRA) missed the tax collection target in the first quarter by Sh79 billion.
One of the pressures facing the government in the next 12 months is servicing of debt. The Consolidated Fund Services, a big chunk of which comprises interest payments, has increased by Sh145.5 billion, pointing to mounting pressure on debt repayments due to higher interest rates and the weakening of the Shilling.
