Unpaid standard gauge railway (SGR) bills, universal healthcare plans and construction of Kenya’s first double-decker road have forced the Treasury to review and increase the budget for the year starting July by Sh86 billion.
The Treasury on Tuesday sought MPs’ approval to increase spending by 2.8 per cent to Sh3.13 trillion in its 2019/20 budget, a parliamentary document showed.
The ministry wants Sh85.5 billion for development projects and an additional Sh6.5 billion for counties in a review of the budget that will reduce recurrent expenditure by Sh5.6 billion.
The cuts on recurrent expenditure follow an order from the Treasury for ministries to slash budgets for lavish travel, advertising and training, which the State said were examples of wasteful spending.
“The recurrent expenditure decreased by 0.5 per cent while development expenditure has increased by 12.2 per cent. This is within the 10 per cent threshold specified in the Constitution,” acting Treasury CS Ukur Yatani said in a statement to Parliament.
The review of the budget comes in a period when the Kenya Revenue Authority has missed tax targets in a business environment plagued by job cuts and reduced corporate profits.
Mr Yatani said Kenya experienced tax shortfalls of Sh60.2 billion in the three months to September and internal revenues from items such as fines, payments for passports and marriage fees was below target by Sh24.4 billion.
The Treasury raised development spending through a mini-budget in what is aimed at spurring economic growth and jobs creation.
Projects to benefit from the budget increase include the SGR, roads, power plants and electricity transmission as well as Big Four projects that seek to boost manufacturing, food and nutrition security, affordable housing and universal health coverage.
The government remains the biggest buyer of goods and services and increased project spending has an effect on economic growth, which is projected to be six per cent this year.
This has the effect of putting money in private hands through demand for raw materials, which ultimately creates new jobs and sales for corporate Kenya.
The Treasury is seeking Sh16.7 billion for the Mombasa-Nairobi SGR line, which was completed and launched in June 2017 given the revenues generated from the line are inadequate for maintenance and payment of management fees to the Chinese firm operating the passenger and cargo business on the track.
About Sh7.3 billion has been allocated for the government share of the Sh59 billion required for the construction of Kenya’s first double-decker road set to link the Jomo Kenyatta International Airport (JKIA) to the Nairobi-Nakuru highway.
The Sh59 billion project would be financed under the public-private partnership (PPP). The China Road and Bridge Corporation (CRBC) is the investor and will recover its share of investment by charging fees for use of the road.
Power transmission and distribution, including unpaid bills for the Lake Turkana Wind Power Project, will take up Sh7.9 billion.
Universal health coverage — which will see the state provide subsidised health services — will be allocated an additional Sh21.9 billion, a pointer of the state's intention to scale the up the service beyond the four counties.
The Big Four projects comprising universal healthcare, food security, manufacturing and affordable housing will get Sh11.8 billion more.
Counties allocation has been increased by Sh6.5 billion to Sh316.5 billion from Sh310 billion, which had been rejected by the governors.