Concerns grow over Kenya’s widening budget deficit

By Jackson Okoth

Attention has now shifted to how the Government intends to raise more revenue to plug the budget deficit, estimated to be Sh356 billion.

 This year’s budget has increased to Sh1.642 trillion. “As a country, we have focused a lot on increasing government expenditure as opposed to creating surplus and allowing a private sector led economic growth,” observed Rev Mutava Musyimi, Parliament’s chairman of the Budget & Appropriations Committee.

This year’s budget deficit has widened owing to more expectations from Kenyans.

huge spending

The many expensive administrative structures created by the Constitution have continued to put pressure on government spending.

The move has left Treasury in an uphill task of reducing the Government’s huge expenditure without negatively impacting on provision of services.  It has the option of seeking donor support or increasing taxes.

Pressure is also piling on the Jubilee Government to honour lofty election promises it made, including free maternity health care and cash for youth and women. The number of public servants has increased substantially.  “As we move to devolved forms of government, where some responsibilities of national government have been transferred to counties, we expect serious rationalisation of government employees,” said Musyimi.

The total revenue collected by the Kenya Revenue Authority stood at Sh861.9 billion during the 2012/13 financial year against a budgeted 1.2 trillion. While tax revenue makes the largest bulk of Treasury’s revenue, it fell to Sh587.9 billion as at April 30th, out of the projected Sh817.4 billion.

The Government borrowed and repaid in total Sh216.4 billion from the domestic money market, against a planned Sh277.7 billion target.

administrative units

External loans also fell to Sh17.5 billion against Sh37.4 billion that had been factored into the 2012/13 budget. Parliament has already expressed concern about the Government’s growing expenditure. 

The legislature warns that in a decade, it could grow beyond 50 per cent if the both the national government and the county governments continue to expand through creations of new institutions and units of administration.

In addition, as the Government continues to borrow to finance the deficit arising from under performance of revenues, the public debt repayment increases. “The State must reduce its appetite and contain the public spending, he noted.

“Indeed the Constitution article 201 (c) provides that the burdens and benefits of the use of resources and public borrowing shall be shared equitably between present and future generations.”