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Rotich on spending spree despite need for austerity

Wednesday May 15 2019

National Treasury

National Treasury Cabinet Secretary Henry Rotich speaks during the Retirement Benefit Authority's 2019-2024 strategic plan launch, at KICC on May 7, 2019. The government plans to spend a total of Sh2.7 trillion in the new financial year. PHOTO | SALATON NJAU | NATION MEDIA GROUP 

PAUL WAFULA
By PAUL WAFULA
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The government plans to spend billions of shillings on projects that have stalled or have been rocked by corruption, budget documents before Parliament show.

In the wake of reports of the collapse of the multibillion-shilling Galana-Kulalu Irrigation project, the government has allocated another Sh7.9 billion for irrigation this year, while the dams projects — riddled with corruption — have another Sh25.1 billion to spend this year.

Though it still has many questions to answer following the National Youth Service (NYS) scandal, the Devolution ministry has received a new budget line of Sh6 billion that did not exist in the past.

This new expenditure is passed as “other capital grants and transfers”, but it does not have any additional narrative to provide the exact details of what this money will do.

The new budget-making law requires a breakdown of expenditure to accompany every line in what is known as programme-based budgeting.

UHURU'S BUDGET

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The government will also be increasing its expenditure on buying shares in companies by over 10 times. This is after it increased its expenditure for strategic investments in public enterprises from Sh300 million to Sh3.7 billion.

Another Sh6.2billion will be pumped into the controversial managed equipment services project that continues to draw resistance from county governments.

The Presidency will also be a beneficiary of what is seen as an end to austerity measures started five years ago, following a 26 per cent increase in its budget this year.

The Presidency will now spend Sh11.2 billion in the new financial year that starts in July, up from Sh8.8 billion it was allocated this year. This will represent a Sh2.3 billion rise in the budget.

Nearly a half of this increase will be used to buy goods and services that cater for entertainment, hosting dignitaries and the day-to-day running of the Presidency.

PAY RISE

The Treasury increased the goods budget for the presidency from Sh4.9 billion last year to Sh6 billion this year. This means that the presidency will be spending about Sh500 million a month or Sh16.4 million every day to run its affairs.

The opening of the purse strings will include a pay rise for employees under the Presidency, after the employee-compensation budget rose from Sh2.3 billion to Sh2.5 billion.

The President and his Cabinet secretaries are among the top government officials that will benefit from the pay rise.

The increase in the Presidency budget is the highest in the past three years and is a back-pedalling on the austerity plan launched by President Kenyatta in 2014.

State House sets the tone on expenditure and an increase in its budget gives other government departments confidence to demand more.

RECURRENT EXPENDITURE

The Presidency, just like the Interior and Defence dockets, has an expenditure latitude not enjoyed by the other government agencies, given that its budgets does not receive the same scrutiny on the grounds of national security, or having budget heads that are not explicit on the actual expenditure.

The National Intelligence Service only receives a recurrent budget, meaning that all the money it receives go into paying salaries and “intelligence gathering”, a nightmare for auditors trying to follow the expenditure.

The NIS budget has now grown from Sh31.9 billion last year to Sh36.6 billion this year.

The government plans to spend a total of Sh2.7 trillion in the new financial year. Most of the money will go towards running the government after Sh1.7 trillion was allocated for recurrent expenditure, which pays salaries, fuels cars, and buys stationery and refreshments.

DEBT

The second biggest cost in the 2019/20 budget is repayment of debts and devolution. The Treasury plans to spend some Sh551 billion in interest payments for loans and pensions, compared with Sh490 billion this year.

Salaries and wages alone will take Sh470 billion in the new budget, an increase from the Sh425 billion in the current financial year.

In the current financial year, the government is spending Sh2.5 trillion, meaning that the next budget will expand by at least Sh252 billion.