Treasury slashes budget by Sh184 billion
Acting Treasury Cabinet Secretary Ukur Yattani attends a press conference to provide updates on the Mombasa Gate Bridge Construction and Mombasa Special Economic Zone Development projects on September 20, 2019. He has said that the government has been hit by a revenue shortfall. PHOTO | FILE | NATION MEDIA GROUP
What you need to know:
- The budget read in June by suspended Treasury Cabinet Secretary Henry Rotich showed that the government planned to spend Sh3.02 trillion by the end of June 30, 2020.
- The government is floating Sh2.83 trillion as total expenditures for the financial year, representing 27.4 per cent of the country’s GDP.
The government has cut its budget for the current financial year by Sh184.3 billion.
The review will, however, not affect the Sh378.4 billion in equitable and conditional allocations to the 47 county governments.
The cuts are contained in the National Treasury’s 2019 budget review and outlook paper.
The document currently before the National Assembly notes that the adjustments have been triggered by revenue projection challenges for the current financial year and the Sh123 billion shortfall in revenue collection for the 2018/19 period.
“In light of these challenges, the revenue projections for the financial year 2019/20 have been revised taking into account lower projection base on account of the Sh123 billion shortfall in financial year 2018/19 and revenue performance by end of August 2019,” the document reads.
SUPPLEMENTARY ESTIMATES
The budget read in June by suspended Treasury Cabinet Secretary Henry Rotich showed that the government planned to spend Sh3.02 trillion by the end of June 30, 2020.
At the time, Mr Rotich had projected to raise Sh2.09 trillion to finance the budget with Sh1.9 trillion in ordinary revenues.
However, the projection has now been slashed to Sh1.85 trillion or 17 per cent of the country’s Gross Domestic Product (GDP) given the outcome of last year’s revenue shortfall and the first two months of this financial year.
The latest development means that the mandarins at Treasury will now prepare supplementary estimates, which acting Cabinet Secretary Ukur Yatani will present to the Cabinet for approval before they are tabled in the National Assembly.
FINANCIAL OBJECTIVES
The adjustments will trigger amendments to the Appropriations Act of 2019 and the Finance Bill, 2019, once it is signed into law.
The government is informed by the fact that the underperformance in revenue collection in the last financial year has implications on the financial objectives outlined in the Budget Policy Statement (BPS) and the budget for 2019/2020.
The government is floating Sh2.83 trillion as total expenditures for the financial year, representing 27.4 per cent of the country’s GDP.
If the estimates are approved by the House, Sh1.74 trillion will be spent on recurrent expenditures, about 16.9 per cent of the GDP, while Sh707.4 billion will go towards development expenditures, which is 6.8 per cent of the GDP.
