Brace for tough times as budget cuts unfold
By Moses Michira | September 19th 2018
Kenyans are staring at severe budget cuts in revised spending plans that could see hundreds of new projects shelved and ongoing programmes interrupted.
Education, power transmission and road development are among the hardest hit in the review intended to slash overall expenditure by Sh55 billion.
Among the reasons for the reviews so soon into the financial year is the reality that revenues will shrink, partly due to the slashing of the value added tax on petroleum products by half to eight per cent.
National Treasury Cabinet Secretary Henry Rotich drafted the budget cuts for approval by the National Assembly.
“Some of the adjustments exceed 10 per cent. We are, in this regard, requesting special approval of the expenditure adjustments,” Mr Rotich said in his memo.
The spending cuts come after the revelation that lenders were getting anxious that the country may have borrowed too much for comfort.
China, the friendly lender that has extended more than Sh1 trillion in loans to Kenya, has this month pronounced itself uneasy about indebtedness and flatly refused offer more debt.
To further complicate matters, the Kenya Revenue Authority projects that it will not meet its collection targets this year, thus informing the massive cuts in the supplementary budget.
Mr Rotich added that the cuts were supposed to cushion future generations from “unwarranted debt burden”.
At Sh2.97 trillion after revision, the current national budget is still the biggest in the country's history.
Not even the two retired presidents - Daniel arap Moi and Mwai Kibaki - have been spared after their kitty was raided of Sh4 million in the budget cuts, a modest amount but one that could help to explain the lengths to which Rotich went to draft the austerity measures.
A retired president is entitled to a pension package that includes domestic servants paid for by the State.
Counties have also lost Sh9 billion from their initial allocations, which could set the stage for a new battlefront between governors and Treasury.
Governors have been fighting for additional allocations, having described the Sh314 billion initial cumulative budget as insufficient.
A total of Sh34 billion worth of new projects are on the chopping block as Government wakes up to the new reality that it is broke - less than three months into the financial year.
Among the most affected are budgets for university education, which have been slashed by Sh1 billion that could have gone to loans and bursaries for students.
Middle-level college education will also be affected, reversing the recent deliberate push by Government to encourage uptake of vocational training.
More than Sh1.3 billion was removed from the budgets meant for technical college education where students stopped paying fees beginning with this month's intake.
The students are also due to receive bursaries, pocket money and loans from the Higher Education Loans Board but the budget cuts leave that proposition hanging in the balance.
Allocations for basic education have been chopped by nearly Sh490 million, mainly from the funding for primary schools. Policing services were not spared either, losing Sh257 million.
The National Assembly’s budgets have been slashed by Sh2.6 billion; a further Sh2.4 billion has been taken from the Parliamentary Service Commission.
Another Sh6 billion has been re-allocated from the Department of Devolution under which the scandal-prone National Youth Service (NYS) falls. It was not immediately possible to tell whether the budget cuts were specific to NYS.
The Ministry of Information and Communication Technology has lost a quarter of its Sh5.9 billion allocation, which is likely to be removed from the centralised government advertising kitty.
But the Ethics and Anti-Corruption Commission and the Directorate of Public Prosecutions have been spared.
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