The Executive is on a collision course with Parliament after a House committee recommended the rejection of the National Treasury’s Sh80.1 billion supplementary budget on grounds that it’s faulty and undermines MPs’ role in budget-making.
The rejection threatens to scuttle President Uhuru Kenyatta’s Big Four agenda that is considered crucial to cementing his legacy.
The MPs accuse the Treasury of ignoring the Constitution, the Public Finance Management Act, 2012, and resolutions of the National Assembly before coming up with the supplementary budget.
If the MPs make good their threat, it will be the first time in Kenya's history for Parliament to reject the Executive budget.
Treasury is pushing to reduce the noncore areas of spending and direct resources to the health sector.
This has raised the Health ministry budget by Sh28.2 billion, bringing the total allocation to Sh115.6 billion that includes Sh62.9 billion for recurrent and Sh52.7 billion for development expenditure.
The Universal Healthcare project has been granted Sh18.03 billion, Sh2.17 billion has been allocated to reduce morbidity and mortality due to preventable causes, while Sh1.89 billion has been set aside to strengthen health policy, standards and regulations.
The government has also set aside Sh2.82 billion to improve standards of living of communities in the arid and semi-arid lands (Asals) and Sh2.24 billion towards the government buildings programme.
Treasury is also proposing to raise the development budget of the Infrastructure State department from Sh124.97 billion to Sh137.58 billion.
About Sh32.23 billion has been allocated towards the Mombasa-Nairobi Standard Gauge Railway (SGR), Dongo Kundu and Kenya Ferry Services (KFS) while Sh12.61 billion is for improving roads.
Some Sh5.93 billion is to promote and facilitate industrial development through value addition and investment and Sh1.32 billion for early learning and basic education towards improved access to primary education.
SOURCE OF FUNDS
According to the supplementary estimates presented to the National Assembly last week, Treasury is proposing to push up the national government’s overall budget by Sh80.1 billion — from Sh2.73 trillion to Sh2.81 trillion — about 2.9 per cent higher.
This includes a decrease in recurrent expenditure by Sh5.7 billion (0.5 per cent) and increase in development estimates by Sh85.8 billion (12.2 per cent).
However, the Budget and Appropriations Committee of the National Assembly has rejected the estimates in a report to be tabled in the House Tuesday afternoon.
A member of the committee chaired by Kikuyu MP Kimani Ichung’wah, who did not want to be named, said the on Tuesday morning, the committee will have a “courteous” joint meeting with Treasury officials and chairpersons of all House committees to announce its rejection of the mini-budget.
Their position is guided by advice from the Parliamentary Budget Office (PBO), which gives professional advice to all committees on budget making.
“The National Treasury told us that the current revenue projections are unachievable. As a committee, the only thing we expected was to have the budget reduced. But if they are now increasing it, where are they going to get the extra funds?” the MP posed.
The PBO position is that Treasury’s failure to stick to National Assembly resolutions undermines MPs' legislative oversight role as spelt out in Article 95 of the Constitution.
The proposed reduction has not spared the other two arms of government, with Parliament set to lose Sh4.892 billion and Judiciary Sh3 billion.
If the MPs were to change their mind and adopt the supplementary estimates, it will result in a financing gap of Sh146.3 billion, which PBO says may have to be funded through domestic or external borrowing — usually commercial debt that is not tied to any conditionality.
The budget read in June already has a deficit of Sh640 billion that will be financed through borrowing.
With the economy set to experience lower growth in 2019 compared to the 6.3 per cent in 2018 due to sluggish growth in the manufacturing sector, the situation can only get worse for the country as revenue projections remain unrealistic.
As MPs put their feet down, the PBO has raised serious concerns on the supplementary budget.
“No information has been provided in regard to measures taken by the National Government in implementing the recommendations made by the National Assembly for the 2019/20 Budget Estimates. This, therefore, goes against the legal provision as well as undermining the principle of the Medium Term Expenditure Framework (MTEF),” PBO says.
PBO notes that although Article 223 (2) of the Constitution says the approval of Parliament for any spending shall be sought within two months after the first withdrawal of the money, the National Treasury has indicated that Sh1.86 billion has already been spent.