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Development to suffer as committee unearths flaws in budgetary estimates

By Joseph Muchiri | Published Fri, June 15th 2018 at 00:00, Updated June 14th 2018 at 23:19 GMT +3
Members of the second County Assembly of Embu. [Joseph Muchiri/Standard]

MCAs want the 2018/2019 budget estimates reorganised or else the county government may be forced to forgo development expenditure for up to one financial year to bridge a Sh2 billion revenue gap.

The revenue gap is occasioned by pending bills, revenue shortfall and budget overstatement.

Erroneous estimates

Assembly Budget and Appropriations Committee Chairman Robert Ireri said the Sh7.1 billion budgetary estimates for the next fiscal year submitted to the legislature by the County Executive was erroneous due to a variance between the figures stipulated in the County Allocation of Revenue Act and the Embu County Fiscal Strategy paper.

Mr Ireri revealed a double entry of conditional grants and loans totaling Sh666.7 million and an additional revenue shortfall of Sh500.5 million meant that the county already had a budget deficit of Sh1.2 billion even before the estimates were taken to the public for incorporation of priority projects.

He said even with the revenue shortfall, Local Purchase Orders and Local Service Orders worth the Sh500 million had already been drafted and were awaiting payment because the money had been properly budgeted.

“This amount in pending bills has to be paid through the next financial year’s budget,” he said.

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Runyenjes Central MCA Steve Simba cautioned that the county was likely to have a Sh2 billion financial deficit by the end of the 2018/2019 financial year because the Sh1 billion projected local revenue was unrealistic.

The chairman said the proposed budget was grossly flawed because all monies coming into the county’s resource basket as conditional grants and loans had been classified as development, yet the expenditure they financed was purely recurrent.

“To attain the minimum 30 per cent development expenditure, the budget has to be reorganised,” he said.

Many projects

Ireri said even if many proposed development projects would have to be terminated due to lack of funds, trying to balance between development and recurrent expenditure at the percentage ratio of 30:70 would be difficult, given the enormous deficits occasioned by the miscalculations at the budget formulation stage.

The Budget Committee’s Vice Chairman Harrison Mwaluko said the only way out would be to shelve development for one whole year in order to pay all pending bills, then resume funding of projects in the next fiscal period.

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