alexa Sh2.8trn budget faces delays as ruling complicates cycle - Daily Nation

Sh2.8trn budget faces delays as ruling complicates cycle

Tuesday April 23 2019

National Assembly Speaker Justin Muturi

National Assembly Speaker Justin Muturi during the Kenya Disabilities Parliamentary Association retreat at the Sarova Whitesands Beach Resort in Mombasa on March 15, 2019. PHOTO | KEVIN ODIT | NATION MEDIA GROUP 

DAVID MWERE
By DAVID MWERE
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The Sh2.81 trillion budget for the next financial year faces serious delays following the High Court ruling in September 2018, that significantly altered the traditional budget making process by the National Assembly.

As such, the leadership of the House has planned a retreat in Mombasa this Friday to discuss the way forward on the ruling that complicates the budget cycle, which has been in place for the last six years.

While confirming the retreat, Mr Muturi said on Tuesday, “Yes, we are meeting this weekend as the House leadership to discuss issues of national importance."

THE RULING

In September 2018, High Court Judge Winfrida Okwany ruled that the government cannot budget for what it has not financed, hence the need to explore possible realignment of the budget process.

This means that the Finance bill, which details revenue collection measures by the government, must be passed first before the Appropriations bill is enacted before end of June.

The ruling on the case, filed by activist Okiya Omtata against National Treasury Cabinet Secretary Henry Rotich and Attorney General Kihara Kariuki, has serious ramifications on the Provisional Collection of Taxes and Duties Act of 2018.

The government has been using the law to collect taxes through a legal notice published in June last year by CS Rotich, indicating that he would use the law to enforce part of the Finance Bill before it becomes law.

Interestingly, the ruling was never appealed, which means the Finance bill must be introduced and passed in June, alongside the budget, before the Appropriations bill is passed.

THE NORM

For the last six years, the process has been such that the Treasury CS unveils the budget in the National Assembly in June, detailing revenue collection measures.

This is then followed by the passage of the Appropriations bill before the end of June to give the government permission to spend money collected through taxation, appropriation in aid, grants and loans.

Currently, the Finance bill is brought to the House in April but is passed 90 days after the enactment of the Appropriations bill, but this is now bound to change.

To abide by the court ruling, an amendment to the Public Finance Management Act will be required, but this will likely go beyond the second week of every June, when the budget is required to be unveiled.

But even as this happens, the court did not provide timelines.

The House leadership will reflect on the current budget cycle, taking into consideration the need to adopt global best practices.

The adaptability of the process will not present difficulties considering the change of timelines in 2017 to accommodate the election period.

FOREIGN DEBT

Other than the budget making process, the retreat led by House Speaker Justin Muturi, will discuss the rising national debt and how to check it, as well as the population census set for August.

The National Treasury, in its annual public debt management report tabled in the National Assembly, projected that Kenya's public debt would hit Sh5.6 trillion by June and about Sh7 trillion by 2022, when President Uhuru Kenyatta completes his second and final five year-term.

This comes as the government seeks Sh368 billion from China to finance its third phase of the standard gauge railway (SGR) project- from Naivasha to Kisumu.

But even as this unfolds, Alego Usonga MP Samuel Atandi, seeks to provide stringent measures to control the government’s appetite for borrowing in his proposed amendments to the Public Finance Management Act.

Currently, parliament has no role in debt procurement as well as its management as it is only tasked to putting ceiling on how much the government should borrow compared to its Gross Domestic Product (GDP).

The Jubilee administration has ramped up spending since 2013 to build much-needed new roads, a railway, bridges and electricity plants, driving up borrowing to plug the budget deficit.

The increased debt has seen Kenya commit more than half of taxes to paying loans, leaving little cash for building roads, affordable housing and revamping of the ailing health sector.

The population census is on this August to enable the government organize its budgetary priorities.