Treasury Cabinet Secretary Henry Rotich has said the government is facing difficulties financing some of its development projects.
Mr Rotich also revealed a proposal to slash the billions allocated to counties by between Sh15 billion and Sh17 billion.
While appearing before the Senate committee on Finance and Budget Wednesday, Mr Rotich blamed the country’s financial situation to a failure by the Kenya Revenue Authority to hit the right targets in the projected revenue collection.
“We have discussed with the KRA on how to catch up by tightening the tax net on the domestic and customs revenue,” Mr Rotich told the committee chaired by Mandera Senator Mohamed Maalim Mahamud.
He continued; “we need to discuss with you (senators) and governors that the figure we put on the table is not feasible based on the challenges that I have explained.”
In the current financial year, Sh302 billion was allocated to the 47 county governments in equitable share of revenue collected, meaning that at the worst case scenario, the allocation could reduce to Sh285 billion.
According to the CS, the shortfall in revenue collection as projected in March last year when the budget was read early last year to pave the way for the August 8 general elections, is because of the prolonged electioneering period and the drought in the country.
The CS noted that this affected revenue collection as it slowed down business activities in the country.
However, Senators Mutula Kilonzo Junior (Makueni) and Ms Rose Nyamunga (nominated) questioned the move to slash the counties allocation saying it may affect ongoing projects at the counties.
Counties are also likely to incur unnecessary expenditures in compensation costs on the ongoing projects that are likely to be affected by the budget cuts.
“Just tell us that the government is broke! Otherwise this thing you are telling us about reduction of the counties allocation is something that we can’t sell. It is impossible to do that midway through another budget making process,” Mr Kilonzo said.