MPs blow Sh25bn hole in Treasury’s budget plan

MPs have left Treasury with a Sh24.79 billion budget hole after revising the national government expenditure upwards amid shortfalls in revenue collections.

The Budget and Appropriations Committee (BAC) reviewed the central government budget from Sh1.896 trillion to Sh1.92 trillion for the year starting July.

This means that Treasury Cabinet Secretary Henry Rotich will need to seek additional cash from taxpayers or debt to plug the hole.

He could also be forced to further review the budget through the supplementary budget with a focus on cuts should revenues fail to match the additional spending.

This is emerging when the weak economy has denied Kenya Revenue Authority (KRA) the opportunity to hit tax targets.

Kenya trailed revenue collection in the nine months to March by Sh97.7 billion due to reduced activity in the economy.

The sluggish economy will be made worse this year with the poor weather that will cut output in the agriculture sector that accounts for a third of Kenya’s wealth, a pointer that the soft economy look set to dim tax collection targets.

The Sh1.92 trillion spending excludes the Sh371.6 billion allocation for counties and Sh805.8 billion for Consolidated Fund Services (CFS) which services public debts, pensions and salaries of constitutional offices.

This will bring the total budget to Sh3.1 trillion.

The Sh24.79 billion increase in the national government budget is attributed to a Sh4 billion additional allocation for student capitation for TVET and Sh120 million golden handshake for the three former speakers of Parliament.

The BAC allocated an additional Sh600 million for construction of water pans and small dams, Sh300 million for digitisation of immigration records and Sh600 million for older persons as grant for NHIF cover.

The Committee cut allocation to the Salaries and Remuneration Comission by Sh104.6 million, Sh1.5 billion from the primary school laptop programme and another Sh1.2 billion for hiring intern teachers.

Some Sh600 million were slashed from the National Youth Fund, Sh800 million for Ajira Fund and another Sh1.8 billion from KRA’s meant for administration and support services.