The FY2019/20 Budget Statement is expected to be presented by the Cabinet Secretary of the National Treasury on Thursday 13th June 2019.
The National Treasury submitted its draft budget estimates to the National Assembly on 30th April 2019 for scrutiny and ultimate debate upon resumption from the long recess starting 3rd June 2019.
The overall allocation to the Executive in the budget estimates is 1.8 trillion shillings, same as 59.8 percent of the proposed total budget, with recurrent expenditure accounting for 62.8 percent allocation while development expenditure accounting for 37.2 percent allocation.
As compared to the 2019 Budget Policy Statement (BPS), budgetary allocation to the Executive has overshot the BPS ceiling by 18.6 billion shillings.
Energy, Infrastructure, and ICT sectors had the most positive variance at 22.0 billion shillings which resulted from increased development allocations to the infrastructure of 13.9 billion shillings and energy at 7.5 billion shillings sub-sectors from the BPS ceiling.
On the other end of the spectrum, Public Administration & International Relations sectors had the most negative variance at 34.4 billion shillings with the BPS ceiling.
“However, we note that the National Assembly approved the 2019 Budget Policy Statement pursuant to Section 25(8) of the Public Finance Management Act, 2012 and capped the FY2019/20 budgetary allocation to National Government at 1.766 trillion shillings,” said Genghis Capital in their 2019/2020 Pre-Budget Topical Note.
The FY2019/20 budgetary allocation to the Executive has surpassed the National Assembly target by 75.0 billion shillings and there is a high likelihood that the allocation will be rationalized once the debate leg kicks off upon resumption of the National Assembly schedule.
County Allocation The total allocation to Counties by the National Assembly is 371.6 billion shillings with 310.0 billion shillings being the county equitable revenue share while the remaining 61.6 billion shillings being conditional allocations.
“However, this county equitable share of the National Assembly diverges with the Senate’s estimate of 335.7 billion shillings,” said Genghis.
For a start, the initial county equitable revenue share in FY2018/19 was 314.0 billion shillings. However, peged on persistent revenue performance, the county equitable share in FY2018/19 was recalibrated downwards by 9.0 billion shillings to 305.0 billion shillings as proposed in the 2018 Budget Review and Outlook Paper (BROP) last September.
“We have no evidence that the Senate approved the revised county equitable revenue share of 305.0 billion shillings. This is at the heart of the diverging FY2018/19 revenue base with National Assembly at 305.0 billion shillings while the Senate at 314.0 billion shillings.”
To compound, the two Legislative houses have different revenue adjustment factors. This points to the credibility deficit between the two bicameral Legislative houses. This has necessitated the ongoing mediation between National Assembly and the Senate and we could see consensus coalesce around 320.0 billion shillings levels as the county equitable share. A protracted mediation process seeks to jeopardize county operations in the formative periods of FY2019/20.