Government and Policy

Inside the Treasury’s 3.08 Trillion-Shilling 2019/20 Budget

BY Soko Directory Team · May 23, 2019 09:05 am

The Treasury’s 3.08 Trillion-Shilling 2019/20 budget has been faulted to be based on weak fundamentals by the Parliamentary Budget Office.

According to the Parliamentary Budget Office report on Estimates of Revenue and Expenditure released on May 22, the Treasury’s budget for the 2019/20 financial year aims to replicate the economic performance of 2018, pushing economic growth to 6.2 percent in 2019 and 7.0 percent over the medium term.

However, since the growth that the budget is based on isn’t consistent, the desired goals might not be achieved at all.

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The National Treasury banked the estimates on stable weather conditions, strong service sector, stable macroeconomic environment, ongoing infrastructural investments, and sustained business confidence as key drivers of the growth. But how will the economy fare?

Before looking at the challenges that accompany the 2019/20 budget, here are the key highlights.

Key Highlights of the 2019/20 Budget

The Total budget for the three arms of government including the county allocation and the Consolidated Fund Services (CFS) during the FY 2019/2020 is estimated as Ksh.3.08 trillion. This is a 2.3 percent reduction from the 2018/19 budget.

The National Government Budget – 1.8413 trillion shillings
The Judiciary – 18.88 billion shillings
Parliament – 43.63 billion shillings
County Allocations (including conditional) – 371.6 billion shillings
Consolidated Funds Services – 805.8 billion shillings

Overall Budget – 3.081 trillion shillings.

Now, where is all this money going?

The Budget Policy Statement ceilings for these allocations was capped at a total of 1.8248 trillion shillings, as follows:

Agriculture, Rural and Urban Development – 59.12 billion
Energy, Infrastructure, and ICT – 406.79 billion
General Economics and Commercial Affairs (GECA) – 23.94 billion
Health – 93.05 billion
Education – 473.34 billion
Governance, Justice, Law, and Order (GJLOS) – 186.86 billion
Public Administration and International Relations – 232.45 billion
National Security – 153.60 billion
Social Protection, Culture, and Recreation – 54.81 billion
Environment Protection, Water and Natural Resources – 82.34 billion
Parliament – 39.50 billion
Judiciary – 18.94 billion

The estimate for the sectoral allocations in the proposed 2019/20 budget, however, stood at 1.8460 trillion shillings.

Now, how does the budget fare economically? Is it sound enough to meet the projections that the National Treasury anticipates? Here is where it falls short.

Inflation Beckons

Evidently, the budget is off to a bad start. For one, the March-April-May long rains say otherwise. Most parts of the country have not received enough rains, which threatens food security and the outlook of inflation.

While unpacking the Estimates of Revenue and Expenditure for 2019/20 Budget, the Parliamentary Budget Office noted that the amount of rainfall for most parts of the country is currently below 55 percent of what is normally experienced.

The report posited that the rains are likely to peter out by end of May 2019 and most of the country will receive below average rainfall amounts by end of the season.

There is also a likelihood of higher inflation on account of food scarcity and higher electricity prices; reduced income for the majority of rural dwellers who rely on income from agricultural activities; reduced agro-processing output and a possible widening of the