How Uhuru plans to spend your money

Finance minister Uhuru Kenyatta on Wednesday unveiled a Sh867 billion Budget, the largest expenditure in Kenya’s history. Documents released to the media on Wednesday night showed the government would use Sh117 billion more than it did in 2008.

Some Sh607 billion will go into recurrent expenditure which largely encompasses Civil Service salaries. Development expenditure this time takes Sh258 billion compared to Sh141 billion last year. The government is increasing its spending on salaries and allowances despite the hard economic times.

About Sh10 billion more has been splurged out on increased salaries for teachers who now consume a total of Sh57 billion. Teachers also expect another Sh8 billion at the end of the spending year, which starts on July 1. In all, recurrent spending has shot up Sh48 billion under the year 2009/10 estimates.

Budget documents showed that the State will use Sh606.7 billion on its operations, a substantial increase from the Sh558.2 billion spent in current financial year, which ends on June 30. Virtually all the 42 ministries are set to get a little more recurrent allocations, which, besides paying Civil Servants, cater for what is referred to as operations and maintenance.

Education ministry will receive Sh11 billion more than it did last year, to accommodate higher salaries for teachers. The ministry’s recurrent budget now totals Sh117 billion. “The increase is mainly due to provision for free secondary and primary education and teachers’ salary award,” the estimates documents stated.

Its sister ministry, that of Higher Education, Science and Technology, gets an additional Sh2 billion at Sh21.6 billion. A more significant rise is under the Finance Ministry reforms (Agenda IV), which together with relief take Sh7 billion. Planning and National Development ministry goes up Sh4 billion ahead of the August national census.

National Assembly

The National Security Intelligence Service budget rises by nearly Sh2 billion, possibly indicating a new focus on security. Also up is the National Assembly budget by Sh1 billion to Sh7.6 billion. However, a major roll back has been made in the Ministry of Special Programmes whose budget has been cut from Sh12 billion to just Sh3 billion.

This may herald the end of emergency operations associated with internally displaced people and optimism that the relief services may not be much needed after August. Critics may quickly latch on to the fact that most spending should be put into development rather than consumption to kick-start the economy, which grew by a paltry 1.7 per cent last year.

Recurrent expenditure has for years remained at 80 per cent of the expenditure, with development investment stuck at 20 per cent. Cuts were made in the Ministry of Lands, which lost nearly Sh1 billion. But the Office of the Prime Minister, whose budget rises to Sh1.3 billion from slightly over Sh1 billion, is one of the winners.

Although the Sh48 billion in recurrent expenditure is nominally large compared to last year, what emerges from the estimates is an effort this year by Budget makers to keep spending levels close to that of 2008. This Budget has been written in the context of sluggish economic growth, dwindling revenues, uncertain donor inflows on the one hand and pressure on the government to keep spending levels on infrastructure high on the other.

Treasury intends to borrow Sh109 billion from the open market to finance infrastructure projects. The strategy is to stimulate demand in the economy by spending more, although that approach has its own dangers, such as the risk of starving the private sector of credit and pushing up prices and interest rates.

Nearly three times

On the whole, salaries and wages will continue to consume a disproportionate share of resources, reflected in the fact that the size of the recurrent budget is nearly three times the development budget.

However, the fact that the development budget has increased by more than 50 per cent within one financial year illustrates an effort to gradually change the ratio between what is spent on capital development and what is spent on salaries. Wages take up just over 30 per cent of total government spending.

Apparently, the government will this year transfer the management of funds for drought relief from the Ministry of Special Programmes to the Treasury. Purchase of new government vehicles is also being centralised at the Treasury.

That explains why the recurrent budget of the Treasury has been adjusted upwards by a massive Sh7 billion. The Office of the President, with a Sh39 billion recurrent budget allocation has the second largest recurrent budget after the Ministry of Education.