The National Treasury will be forced to make a Sh12 billion reallocation or borrow more to finance the National Government-Constituency Development Fund (NG-CDF) after MPs blocked plans to reduce the fund’s budget.
This means that the allocation to the NG-CDF for the 2020/21 financial year is Sh41.7 billion as it was in the 2019/20 financial year.
The CDF kitty is part of the Sh1.883 trillion that the national government intends to spend in the next financial year.
National Assembly Speaker Justin Muturi has already announced that the presentation of the budget highlights by CS Ukur Yatani will be on June 11.
With social-distancing challenges brought about by the Covid-19 pandemic, it means that only select MPs out of the 349 will be allowed to attend the presentation in the debating chamber.
On Friday, National Assembly Minority Leader John Mbadi, who is also the Suba South MP and a member of the Budget and Appropriations Committee, said restoring the CDF money did not come easy.
Mr Mbadi said it took his intervention and that of Majority Leader Aden Duale at a meeting with the Treasury CS to restore the money.
The meeting held at the National Treasury building on Wednesday was also attended by Finance and National Planning Committee chairman Joseph Limo (Kipkelion East), Budget committee vice-chairman Moses Lessonet (Eldama Ravine) and Treasury Director of Budget Francis Anyona.
Mr Mbadi said the agreement was reached on the basis that the deficit in the budget is not increased and that the CS does not touch the economic stimulus package (ESP).
“We agreed and it has been captured in the report on the estimates of the budget committee that the allocation to the CDF be maintained as it is and that the National Treasury finds areas to get resources to finance the kitty,” Mr Mbadi said, noting that the budget is a negotiated document between the Executive, Parliament and the Judiciary.
Of the Sh41.7 billion CDF kitty, about Sh39 billion will be shared equally among the 290 constituencies, with the balance going towards the operations of the NG-CDF Board, which manages the fund.
This means that each constituency will get Sh134 million in the next financial year.
The NG-CDF Act provides that at least 2.5 per cent of the revenue collected nationally be allocated to the CDF kitty.
The CDF money had been earmarked for chopping during the consideration of the Supplementary Budget II for the 2019/20 financial year, formulated largely to cushion the economy against the effects of Covid-19.
Had the Treasury had its way, CDF would have seen its allocation reduced to Sh29 billion.
However, the MPs in their numbers, ganged up and shot down the proposal, leaving the Treasury with the headache of sourcing the funds and in the process carrying it forward to the 2020/21 financial year.
The 2020/21 budget has a gaping hole of about Sh1.3 trillion to be financed through external and local borrowing, as well as grants.
This means that borrowing to finance the CDF billions would worsen the country’s indebtedness.
Kitui Central MP Makali Mulu, a member of the Budget committee, told the Nation that it would have been illegal for the Treasury to allocate less to CDF than what is provided for in the NG-CDF Act.
“What people don’t know is that allocation to CDF kitty is not a favour. The National Treasury must always be guided by the law when doing this. What had been allocated was far too little and I am sure it would have not waited to be amended on the floor of the House,” he said.
With MPs not keen to increase the budget deficit and the ESP out of bound, Mr Yatani was given the difficult choice of reducing the various budget lines to get the CDF money.
The budget report tabled in the National Assembly on Thursday afternoon shows that Sh5 billion will come from the State Department of Planning vote head, with the Parliamentary Service Commission losing Sh2 billion, largely from the foreign travel budget line.
The Sh3 billion has been financed through various reductions from other budget lines.
The disagreement over the NG-CDF cash was the reason the Budget committee delayed tabling its report on the estimates on Tuesday as required.
The budget estimates were tabled in the House on April 30, paving the way for the departmental committees to conduct budget hearings with their respective government agencies they on which they provide oversight the better part of May before reporting to the budget committee.