The 2019/2020 National Budget: A Detailed Look on the Allocations

National Assembly has time-constraints as it starts a parliamentary debate on FY2019/20 budget that is set to be released early this month of June.

The current debate on the 2019/2020 budget will be of higher priority in comparison to the Supplementary Budget II Estimates for FY2018/19 which had been tabled in the National Assembly ahead of the long recess.

The Budget and Appropriations Committee (BAC) has increased the overall budgetary allocation to the National Government by 24.9 billion shillings to 1.93 trillion shillings bringing the overall budget to 3.1 trillion shillings.

The increased allocation by BAC is towards public finance management (8.9 billion shillings), vocational and technical training (8.3 billion shillings) and ICT infrastructure development (6.4 billion shillings) vote items.

On the other end of the spectrum, funding towards primary education, secondary education, and the blue economy has been decreased by 1.5, 1.2 and 1.3 billion shillings respectively, from the draft budget estimates.

Recurrent expenditure accounts for 63.6 percent of the total national government expenditure while development spending accounts for the remaining 36.4 percent.

The major items under recurrent expenditure are Operations & Maintenance and Wages and Salaries. Development spending remains a key concern going by past budget performance, in particular with regards to absorption of funds and stalled projects.

With National Treasury targeting a 10.0 percent return on public investments, it is of necessity that higher quality and viable public projects should be pursued and implemented. The focus should also be towards the tradable sectors in order to boost the trade imbalance

The overall allocation to the mandatory charge, Consolidated Fund Services (CFS), is 805.8 billion shillings in FY2019/20; 12.2 percent y/y decline from FY2018/19 estimate of 918.1 billion shillings.

This is mainly attributed to the decline in public debt from 832.1 billion shillings in the current financial year to 696.6 billion shillings in FY2019/20.

As recent trends indicate, budget expenditure will be plagued by a number of issues: Low absorption of funds at the end of April 2019, exchequer issues for recurrent and development was 739.3 billion shillings and 215.7 billion shillings respectively. This represented 79.4 and 56.4 percent respectively, of total Treasury disbursements in FY2018/19.

Disbursements towards public debt hit 635.4 billion shillings and accounted for 92.0 percent of overall CFS as at end of April.

Disbursements to county governments totaled 215.7 billion shillings at the end of April, representing 76.8 percent of overall allocation to the devolved units.

Although largely a function of underperformance in revenue, the slow absorption of funds has also been on account of internal constraints among Ministries, Departments, and Agencies.