PriceWaterhouseCoopers calls for higher budget absorption

Advisory and audit firm PricewaterhouseCoopers (PwC) is calling for increased absorption of the expanded budget for the public to benefit.

Through its pre-budget analysis ahead of the national budget statement set for next month, the firm noted that despite the budget rising over the years, there has been sharp drop in absorption of development budget.

PwC Partner Benson Okundi said, “There has been a delay in budget absorption. Once a budget is published and is being implemented, not the entire amount allocated is being absorbed. This defeats the purpose of the budget especially around development expenditure.”

According to the report from Controller of Budget, Exchequer releases towards development during the first half of financial year 2015-16 was Sh110.4 billion representing 14.3 per cent of the annual net estimates. This is a low percentage considering that at half year, total exchequer releases towards development expenditure should be about 50 per cent of the annual net estimates.

Debt levels

In the analysis, the firm also noted that the split between recurrent and development expenditure has not been good to spur growth. Okundi observed that even though in 2016-17 budget estimate, development and recurrent expenditure have been estimated at almost similar levels, implementation record has not been good.

Commenting on rising debt levels, PwC said even though the country is still within the debt threshold, the public should question more on the quality of borrowing and its utilisation. “We should be asking whether the debt we have accumulated was at competitive interest rates and if we projected future net returns to see that we will be able to get good returns,” said Okundi.

He added that if most of the borrowing is used in funding recurrent expenditure, development will slow and eventually pose repayment crisis.