Treasury projects 4pc spending rise for this fiscal year
By Rawlings, February 22, 2024
National Treasury has projected a four per cent rise in total government expenditure of Sh162 billion, increasing expenditure from Sh3.98 trillion as approved in 2023/24 to Sh4.14 trillion in the 2024 Budget Policy Statement (BPS).
There is Sh5.69 billion increase in allocations to county governments equivalent to one per cent of the 2023-24 allocation. County governments are also set to play a central role in the delivery of public services across the country, following the devolution of governance and public finance outlined in its constitution of 2010.
National Treasury says projected 10 per cent increase of Sh109.5 billion is heavily driven by a rise in proposed expenditure on the consolidated fund services, which houses debt servicing expenditures and pensions. Yesterday, the International Budget Partnership (IBP) while appearing before the Senate Finance and Budget committee said the tax reforms introduced in financial year 2023-24 sought to raise Sh2.571trillion in ordinary revenue, a significant 26 per cent increase over the financial 2022-23 target of Sh2.041 trillion.
“Relatively low allocations to county governments will affect the delivery of devolved services such as health, agriculture and water for Kenyans across the country.”
“To ensure the continued and effective delivery of services at the national and sub-national level we recommend the national treasury devise ways to service debt obligations in a manner that enables more substantial additional allocations to national and county governments,” said IBP Country Manager Abraham Rugo.
The international budget think tank also called for transparency and accountability of the pending bills and county governments to settle eligible pending bills as a first charge as required by the Public Finance Management (PFM) (County Governments) 2015.
It argued that counties should ensure that their procurement plans align with the disbursement of funds and the expected revenue targets, adding that they should adhere to the preparation of credible budgets with realistic revenue targets. “The accuracy and completeness of the pending accounts payable is a question that needs close monitoring to ensure that unauthorised and unsupported expenditures are not part of the pending bills,” said Rugo.
He told the Ali Roba led committee that the pending bills have been highlighted severally by the Office of the Controller of Budget (OCOB) as a challenge to effective budget execution, adding that there have been negative consequences associated with pending bills such as litigation and loss of trust in government.
“Delay and accumulation of pending bills means most of the county services are not budgeted or given priority due to the prioritising of settlement of pending bills. There has been an untimely approval of supplementary budget estimates to adopt prior year pending bills in the current budget leading to payment delays,” said Rugo.
According to Rugo, some of the pending bills accrued by county governments are as result of non-consideration of cash brought forward from previous financial years which then implies a deficit budget that eventually leads to unplanned pending bills at the end of the financial year.
For instance, he argued that Isiolo County budgeted for Sh1.07 billion as cash brought forward from FY 2021/22. However, a cash balance of Sh84.38 million from FY 2021/22 was reported. “Counties should prepare budgets with correct opening balance amounts and with respective expenditures to ensure a balanced budget and avoid unplanned pending bills,” Rugo stated.
He further told the committee that change of county administrations has led to delayed settlement of pending bills due to the requirement to undertake a verification process, adding that in some cases, political interference and refusal by successive governments to honor obligations.
“The delays of settlement of these pending bills is a risk to county projects which gets delayed or completely abandoned at some point and bring in issues of poor service delivery.” And now IBP is recommending that a Public Sector Accounting Board (PSAB) should provide adequate documentation of pending bills and assets which will facilitate the smooth handover between county government regimes.
The budget think tank further contends that in comparison to the total allocation, national government expenditure is expected to increase by two per cent (Sh46.99 billion) in comparison to the allocation for 2023/24.