The National Assembly Approves the Budget Policy Statement albeit with Amendments
Pursuant to Section 25(8) of the Public Finance Management Act, 2012, and Standing Order 232(10), the National Assembly, by a resolution early this week, approved the Budget Policy Statement, and consequently the Medium-Term Debt Management Strategy for Financial Years 2019/2020- 2021/2022, albeit with amendments.
During its sitting on Tuesday afternoon, the House also made a resolution that the ceilings of each arm of government for the Financial Year 2019/2020, be capped as follows:
a) Parliament- Kshs. 39.501 Billion.
b) Judiciary- Kshs. 18.937 Billion
c) Executive- Kshs. 1,766.363 Billion.
Further, the House resolved that the total allocation to County Governments for the Financial Year 2019/2020, be capped at Kshs.371.6 Billion as follows:
- The County Governments Equitable Share Kshs.310 billion;
- Leasing of Medical Equipment Kshs. 6.2 Billion and Level 5 hospitals- Kshs. 4.326 billion;
- Compensation for user fees foregone Kshs. 900 million;
- Allocation to Level 5 Hospitals Kshs. 4.326 billion;
- Supplement for construction of County Headquarters-Kshs.485.2M;
- Rehabilitation of village Polytechnics-Kshs.2B;
- Allocation from Fuel Levy Fund (15% of collections)- Kshs.8.984B; and
- Allocation from loans and grants- Kshs.38.705B.
The House also approved Kshs.5.8 billion allocation in the Equalization Fund, to be approved as provided in the Budget Policy Statement. In addition, a resolution was made to the effect that the financing of the 2019/2020, budget and the medium term be set at a ceiling of Kshs. 2.062 trillion for Financial Years, 2019/20, 2020/21, 2021/22 and 2022/23. This is meant to ensure that the deficit/fiscal balance is no more than 5.1%, 3.9%, 3.3% & 3.1% respectively.
The National Assembly keen on addressing the emerging policy issues raised in the Budget Policy Statement while sustaining the current Kenyan economic growth momentum, made sturdy resolutions geared towards steering the economy towards recovery, as well as supporting the implementation of the Big Four Agenda of the government as follows:
- On debt sustainability, the House made a resolution that the government strives to achieve a balanced budget and eventually run a budget surplus so as to ensure a long term debt sustainability strategy.
- In recognition of shrinking government revenue, the National Assembly proposed that the National Treasury reduces exemptions even as the Kenya Revenue Authority increases efforts to raise targeted revenue. The House further called for court cases with regard to withholding tax on betting and gaming, to be expedited so as to unlock revenue that would otherwise be used to reduce the budget deficit. Members further urged the government to re-invigorate the Privatization Commission with a view of disposing off non-strategic parastatals.
- On Pending bills, the House resolved to revive the Pending Bills Closing Committee which will carry out an audit of all existing pending bills to verify whether they were procured in the right process, and to determine whether they are payable, as well as the best structure of payment.
- With regard to Stalled projects it was resolved that an audit be carried out to establish the total number of stalled projects and that the various institutions with stalled projects be compelled to come up with a policy giving first priority to completion of stalled projects.
- On the Implementation of the Big Four Plan, the Members called on the National Treasury to submit an accountability matrix for the Big Four Agenda plan indicating the quantum resources, implementing agencies and the indicative timelines for implementation of the projects under the Big Four plan.
- The House further resolved that with regard to Public Private Partnership (PPP), the National Treasury is called upon to enhance the PPP programme while managing contingent liabilities to ensure that various services can be provided by the private sector.
- Keen to Enhance Productivity, the House called on the National Government to consider a special allocation for productive sectors of the economy such as agriculture and manufacturing which is visible and sufficient enough to unlock these sectors. This is expected to boost the uptake of additional investments.
- The House weighed in on the issue of the rationalization of additional accounting officers, asking the National government to ensure rationalization in appointing more accounting officers as this brings additional administrative costs including enhancing the wage bill.
- Noting that there is a growing concern on debt serviceability versus revenue generation, the National Assembly resolved that the National Government borrows wisely for development so as not to burden future generations. Members observed that there is need to strike an optimal balance between external and domestic borrowing to protect the country from external shocks while ensuring credit is still available to the private sector. Thus, at an appropriate time, the House resolved to amend the PFM Act to provide for a numerical debt ceiling as opposed to the current scenario where the debt ceiling is pegged on GDP projections.
The 2019 Budget Policy Statement (BPS), which the National Treasury observed was prepared against a background of a weakening global economy, was presented to the House for review soon after the Assembly resumed for the 3rd session of the 12th Parliament, early February. According to the law, the BPS, which forms the crux of the Budget Making Process (a key role of Parliament), should be presented to the National Assembly for review by February 15th every year.