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Powers of the Treasury to rationalise budget allocations should be returned

Tuesday May 1 2012


By JAINDI KISERO [email protected]

The chief registrar of the Judiciary, Ms Gladys Shollei, makes a valid case when she argues that the Treasury has neither the right nor the power to tinker with the Judiciary’s budget proposals.

Under the new Constitution, the Judiciary, Parliament and other independent organs are accorded fiscal autonomy. 

It used to be said that under the old order, the Executive and Parliament controlled both the purse and the sword.

Treasury mandarins enjoyed seeing the Chief Justice going down on his knees before them cap-in-hand, begging for resources to run the affairs of the Judiciary. The game has changed.

Now, Ms Shollei wants a whopping Sh16 billion – Sh7 billion more than the budget ceiling prepared and recently published by the Treasury.

She says the Judiciary badly needs the money to hire more judges and magistrates.

Fiscal autonomy sits very well with the principle of separation of powers. But there is a very big risk around this new experiment.

Parliament and the Judiciary could very well bust the national budget.

Mark you, Parliament has set its own budget for the next financial year, a massive Sh13.9 billion, a figure higher than the recurrent budget of the Ministry of Public Health. 

In the name of fiscal autonomy, Parliament now has the leeway to do what it wants. It has been increasing salaries and gratuities for MPs with unprecedented profligacy.

From their little separate corners – everybody in the name of exercising fiscal autonomy – is busy lodging claims on the national purse without looking at the bigger picture.

We forget that budget-making is about setting priorities for all the sectors of the economy and competing national priorities.

You choose between spending money on hiring more judges and magistrates or building rural dispensaries. 

In ordinary circumstances, the clearing house for these competing priorities should be Parliament’s budget committee.

Yet the truth of the matter is that the budget department as currently constituted, is ill-equipped to perform this critical role.

The budget is not just about doling out expenditure allocations between ministries, the Parliamentary Service Commission and the Judiciary.

Somebody must model the whole fiscal framework and measure whether the expenditure allocations address national priorities.

You must put everything in the context of the broader macroeconomy and figure out how the allocations are likely to impact on growth and the general level of prices in the economy.

Somebody must figure out whether wages and recurrent costs are taking too much of the national purse, leaving little to operations and maintenance of public assets.

In retrospect, I think that in the rush to reduce the “imperial” powers of the Treasury, we whittled down the critical role which the Treasury must continue to play under the new constitutional dispensation.

To avoid the kind of complaints coming from the Judiciary right now, we must go back to making the Medium Term Expenditure Framework ( MTEF) process more robust.

In the past, the MTEF public hearings attracted a great deal of public participation and quality discussions. Attending public hearings was a must for economic and business journalists.

The beauty of MTEF is that it allows all claimants to the public purse to see the bigger picture and to appreciate that in the context of crippling resource shortage, horse-trading must take place.

My parting shot is a comment about transparency in the budget process. As a country, we need to start debating whether we should continue committing such a disproportionate share of the national purse to Defence and the National Intelligence Service.

Next year, we are planning to spend a whopping Sh70 billion on the recurrent budget of the Department of Defence. It is higher than the recurrent budget for Health.

Worse, the budget of defence and national intelligence is opaque. They do not tell you how and where the money will be spent.

If the Treasury persists in presenting the budgets of these two departments in such an opaque way, it will soon find itself in court.