NAIROBI, Kenya, June 12 – President Uhuru Kenyatta’s Big Four priority projects of affordable housing, food security, universal healthcare and enhanced manufacturing are set to be funded to the tune of 450 billion representing 14.6 per cent of the 2019/20 financial year budget.
According to estimates presented by the National Assembly Budget and Appropriations Committee last Tuesday, Sh374.1 billion will be channeled towards the implementation of the development priorities while Sh76.1 billion will be injected to the drivers of the development agenda.
The allocations however fall short of projections set under the Medium Term Plan III (2018-2022) which sets out an indicative budget for agriculture and livestock at an estimated Sh55.77 billion, manufacturing at Sh125.4 billion, health at Sh 82.8 billion, and housing at Sh103.2 billion.
The Kimani Ichungwah-led budget team also expressed concern over delay in the operationalization of the Universal Health Care (UHC) pilot in four counties – Kisumu, Isiolo, Nyeri and Machakos – with a summative report yet to be concluded. The Ministry of Health had requested Sh4.6 billion to rollout UHC in the remaining 43 counties despite having pegged the expansion of the program on the success of the pilot launched in December last year.
National Treasury Cabinet Secretary Henry Rotich is set to present the 2019/20 budget at the National Assembly on Thursday June 13. while outlining measures undertaken to reduce fiscal deficit which stands at 6.3 per cent of GDP under the current financial year.
This year’s budget is estimated at Sh3.02 trillion, a 4.2 per cent reduction compared to the Sh3.07 trillion 2018/19 budget. The decline is mainly attributed to reduced allocations for Consolidated Fund Services (CFS) which will now stand at Sh962.6 billion compared to Sh805.8 billion in the 2018/19 fiscal year.
An estimated Sh696.6 billion will be channeled towards public debt servicing costs accounting for 86 per cent of CFS spending.
Interest rates expenses are expected to rise to 10 per cent as a result of a 32 per cent increase in external debt.
The 2019/20 budget estimates set national government expenditure ceiling at Sh1.8 trillion. Parliament budget is capped at Sh43.8 billion. County governments and the Judiciary are set to receive an estimated Sh372.6 billion and Sh 18.9 billion respectively. Sh5.8 billion is to be set aside for the Equalization Fund.
The National Treasury has also set out to incrementally lower the country’s fiscal deficit to 3 per cent of the Gross Domestic Product (GDP) in the medium term (2022/23) in a bid limit borrowing. Kenya’s fiscal deficit for the 2019/20 financial year is estimated at 5.6 per cent of the country’s GDP representing a 0.7 per cent decline from the current financial year’s fiscal deficit of 6.3 per cent.
National Treasury is hoping to sustain the reforms to attain the 3 per cent mark by the financial year 2022/23 in line with the East African macroeconomic convergence criteria.
The 5.6 per cent deficit under the 2019/20 financial year represents a Sh607.8 billion shortfall out of which Sh324.3 billion will be financed through external borrowing while Sh289.2 billion will be raised through domestic borrowing.
The ambition to scale down fiscal deficit is part of the country’s effort to improve compliance the regional macroeconomic convergence criterion which requires member countries to attain a fiscal deficit of not more than 3 per cent of respective Gross Domestic Product indices and a headline inflation rate of less than 8 per cent.
The East African fiscal convergence framework also requires members of the East African Community bloc to manage public debt below 50 per cent of their Gross Domestic Products in Net Present Value Terms and maintain reserves of at least 4.5 months of imports as precondition for entry into a monetary union by 2024.
In nominal terms, the 2019/20 budget as share of GDP is projected to reduce to 28 per cent compared to 32.4 per cent in the current fiscal year. The taxman is projected to raise Sh2.1 trillion in revenue under the 2019/20 financial year after revenue projections were revised upwards by Sh35 billion.