Parliament body cuts finance ministry's request for extra spending

A Kenyan parliament committee has cut the extra funding the finance ministry had requested in the 2019-20 budget, saying the ministry’s revenue collection will fall short of forecasts.

In mid-November, the finance ministry requested Sh86.60 billion, or 3 per cent rise in spending for roads, health, and projects to support the manufacturing sector, a priority of President Uhuru Kenyatta.

But the parliament’s budget and appropriations committee slashed the amount to 49.77 billion shillings, according to its report dated November 26, seen by Reuters on Wednesday.

The committee said the government’s revenue collection performance for 2019-20, which ends next June, may fall short by about Sh120 billion to Sh1.7 trillion.

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“Given the likelihood of underperformance of the revenue collection for 2019/20, if the supplementary budget was to be approved as submitted, the financing gap will have to be met from additional borrowing,” the report said.

The original supplementary budget had forecast the fiscal deficit at 6.3 per cent of GDP in financial year 2019/20, which began in July, up from 5.9 per cent.

With elevated borrowing, especially from China, in recent years for projects like a new railway line linking the port of Mombasa with the hinterland, the country’s growing debt stock has raised concerns among the public.

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Total public debt stood at 62.3 per cent of GDP as of June, the World Bank said in late October.

When Kenyatta took office in 2013, total public debt stood at about 42 per cent of GDP. The government has justified the higher borrowing, saying it is required for infrastructure.

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Finance Minister Ukur Yatani, who was appointed in July after the previous minister was charged with graft, has said he is committed to cutting the deficit by reducing spending and boosting revenue collection.

The budget committee also said that the finance ministry gave insufficient information to justify the increased spending and that it introduced projects in the supplementary budget that were not highlighted when it was first read in June.

It also lambasted the ministry for proposing cuts in the Judiciary and parliament budgets.

“This should never happen in future, as this is against the constitution,” the report said.

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Ukur YattaniWorld Bank