The ‘Big 4’ Sh2.5tr budget

The ‘Big 4’ Sh2.5tr budget
Treasury headquarters, Nairobi. Photo/FILE

James Momanyi @jamomanyi

The National Treasury yesterday tabled in Parliament a Sh2.49 trillion budget for the 2018/19 financial year. The expenditures are tailored to enable the government attain it’s new economic blueprint dubbed ‘The Big Four’ to be executed in the next five years. The blueprint plans to address bottlenecks holding back four key economic enablers — manufacturing; food security and nutrition; universal health care and housing — from achieving their full potential.

According to the Budget Policy Statement (BPS) presented to the House, the record Sh2.49 trillion, which is up from Sh2.32 trillion in the current financial year, spending plan will be shared amongst the National government, which has been allocated Sh1.607 trillion, Parliament (Sh31.7 billion), Judiciary (Sh17 billion), consolidated fund services (Sh461.9 billion) and county governments (Sh372 billion), including conditional grants.

These allocations are against a projected tax collection, including Appropriation-in-Aid (revenues collected by ministries in the form of taxes, fines, fees, other charges, or donor funds for direct financing of a project) of Sh 1.8 trillion from the Sh1.6 trillion in the current financial year (2017/18).

This means that Kenya Revenue Authority (KRA) has a huge task to match this target because by the end of December last year, the tax collector had collected total cumulative revenues, including Appropriation-in-Aid (AiA) of Sh709.4 billion against a target of Sh777.7 billion for the first half of this financial year.

The recorded shortfall of Sh68.3 billion was due to under performance of the ordinary revenues by Sh44.8 billion and the ministerial A-I-A by Sh23.5 billion. National Treasury Cabinet Secretary Henry Rotich said that the revenue projections are underpinned by on-going reforms in tax policy and revenue administration that will see ordinary revenues grow to a projected Sh1.68 trillion in the next financial year up from Sh1.48 trillion in the current financial year.

KRA has already rolled out the Integrated Customs Management System (ICMS) that is aimed at sealing loopholes at the Customs department to prevent concealment, undervaluation, mis-declarations and falsifications of import documents.

The tax agency also intends to implement the Regional Electronic Cargo Tracking System to tackle transit diversion and also scale up on-going and routine activities such as Pre-Verification of Conformity, benchmarking and auctions.

Further increase of ordinary revenue will be scooped from the expansion of tax base with the government targeting the informal sector, betting lotteries and gaming, pursue non-filers and increase focus on taxation of international transactions and transfer pricing.

Treasury projects the economy to grow by 5.8 per cent this year compared to the estimated 4.8 per cent last year because of the ongoing public sector infrastructure investments, recovery in the tourism sector and continued stable macroeconomic environment. Because of the projected expenditures and revenues, Treasury expects to incur a Sh638.2 billion deficit during the financial year.

The deficit will be financed by net external financing of Sh214.7 billion, net domestic borrowing of Sh368.8billion and other net domestic revenues of Sh4.2 billion. In 2018/19 recurrent expenditure will gobble Sh1.5 trillion, with the bulk of this money taken up by salaries bill for teachers and civil servants including the police.

The remaining amount (Sh1 billion)with be allocated to the development budget, with a special focus being realisation of The Big Four Plan, which includes improved food security and health care; supporting value addition in the manufacturing sector to raise the share to Gross Domestic Product to 15 per cent by 2022 and constructing of at least 500,000 affordable houses by 2022.

To support the economic transformation agenda, the government intends to double the number of vulnerable citizens supported through the cash transfer programme (Inua Jamii); and provision of health insurance cover through the National Hospital Insurance Fund for all citizens above the age of 70.

Proposed sector allocations have be aligned to projects under the The Big Four plan with education getting the lion’s share of Sh428 billion mainly be spent on expanding technical colleges and universities to equip youth with skills required to drive the industrialisation agenda.

Energy, infrastructure and ICT comes second with Sh405 billion followed by public administration and international relations (Sh274b); governance and justice (Sh196b); national security (Sh126b); water and natural resources (Sh78b); health (Sh70b); culture and recreation (Sh53b); agriculture, rural and urban development (Sh39b) and commerce facilitation (Sh21 billion).

The BPS awaits scrutiny by House committees which oversee various ministries. They have seven days from yesterday to prepare a report for the Budget and Appropriations committee

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