Treasury ignores austerity, gives hefty budgets for perks

National Treasury has once again made an about-turn on austerity plan and raised budgets. It gave generous increments to various ministries perhaps on the prospect of the anticipated proceeds from fresh loans.

The timing of the bigger allocations to most ministries and departments comes months after severe budget cuts were presented and approved by Parliament last September.

Then, the State chopped the national budget by Sh37 billion to Sh2.67 trillion before yesterday’s raise that has burst even the original estimates.

The basis for the prior budget cuts was that revenues were short and that the Kenya Revenue Authority was unlikely to hit its collection target.

But now, the Supplementary Budget II tabled yesterday is intended to offer salary hikes for different public workers – on the day top officials from the National Treasury started a fresh round of borrowing through issuance of the third Eurobond.

Legislators were taken aback by the revised budget saying the extensive adjustments had rendered the “budget unpredictable and ineffective”.

“…the committee will require an extensive explanation on why/how expenditure adjustments fit the criteria of the supplementary budget line in line with the legal provisions and those found not fit will be denied approval,” the National Assembly budget committee wrote in its reservations.

State House emerged as one of the biggest beneficiaries of increased budget allocations in the latest budget review that has increased the entire executive spend by Sh65 billion.

Servicing loans

Most of the Sh1.6 billion additional allocation to the Presidency, which also includes the Deputy President Services, will be spent on maintenance, according to the Supplementary Budget released yesterday.

National Treasury, which drafted the revised spending, raided the kitty meant for servicing loans and payment of pensions – known as the Consolidated Fund Services (CFS), to meet most of the bigger budgets.

Some Sh26.5 billion was recalled from the kitty and reallocated to recurrent spending which mostly consist of salaries and operation costs.

It is likely that the reduction in the CFS vote was because the Government has postponed the repayment of loans which had been planned, as it was unlikely to touch the pension benefits of retired officials.

Further, another Sh34 billion has been withdrawn from the development budget meaning several projects might be stalled, especially those that were yet to begin.

Among the reasons for the revised spending plans is that revenues were falling behind targets which is ironic considering plans by the State to increase allocations, too close to the end of the financial year.

Revenue collected by KRA for the nine months to March was short by Sh98 billion, a deficit which the Treasury attributed to the underperformance of income tax, import duty and Value Added Tax (VAT).

“Implementation of the budget continues to face various challenges…including the recent drought in some parts of the country, underperformance of projected revenues and the increased demand for additional priority expenditures,” the Treasury said.

Legislators were informed that apart from the Presidency, the pay for teachers, police and the military had been under-budgeted for in the original plan as the reason the three votes were granted an additional Sh31 billion.

An additional Sh2 billion has already been spent on the National Integrated Information Management System (NIIMS),- Huduma Namba - by March 31 out of an entire budget of Sh6.9 billion.

Huduma Namba was an afterthought which had not been considered when the national Treasury was drafting the current budget early last year.

However, the allocation for NIIMS is at least 900 million more than the initial projections that placed the cost between Sh5 billion and Sh6 billion.

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