Kenyans are failing to fully benefit from the country’s development budget as the national government and counties fail to maximise on allocations, experts now say, mainly on low or late disbursements.
This is despite the year-on-year increases in the national budget, which went up to Sh3.7 trillion in the current financial year, with the latest supplementary budget pushing it further up to above Sh3.9 trillion.
This is up from Sh3.3 trillion in the 2022/23 financial year.
Development expenditure for the current financial year ending June 2024 is set at Sh713.3 billion, up from Sh688 billion in the previous fiscal year.
Last year, absorption based on approved estimates was at 66.2 per cent, official National Treasury data shows.
On the flipside, recurrent expenditure and absorption continues to record up to 100 per cent uptake, as spending continues to rise in the wake of an expanded government.
“There is always an increase in recurrent expenditure which is being pushed up by the spike in the number of MDAs (Ministries, Agencies, and Departments),” said Abraham Ochieng’, Program Officer, Advocacy and Outreach at the International Budget Partnership Kenya.
He spoke on Tuesday during a forum on national government budget implementation.
Recurrent expenditure in the current financial year is set at Sh2.5 trillion (15.6 percent of GDP), up from Sh2.2 trillion, with equitable share to county governments projected at Sh385.4 billion.
County governments have also been on the spot for failing to spend development cash.
The latest report by the Controller of Budget shows of the Sh160.5 billion allocated to counties for development, they utilised Sh97.9 billion only in the last financial year ended June 2023.
About Sh62.5 billion remained idle at the counties' accounts at the Central Bank of Kenya.
The low absorption has however been blamed on late or zero disbursement from the National Treasury.
Low absorption rates for development budgets means citizens fail to benefit from public resources, with projects like roads, hospitals water projects, education, among others affected.
National Treasury has however blamed low domestic revenue collection for disbursements, even as the country continue to depend on borrowing to bridge budget deficits.
According to CS Njuguna Ndung’u, low revenue collection is impeding local development.
“Revenue collection in form of taxation provides basis for growth and reliance on debt and borrowing on other people’s savings will not yield tangible development,” the CS said during a recent Treasury forum with Finance, Public Debt and Budget Committees of the National Assembly and Senate.
Kenya Revenue Authority has continued to fall short of its targets, with quarter one of this year (July-September) target of Sh665.9 billion being missed by Sh79 billion.
This comes, as public debt repayment remains a headache for the government as it eats up almost half of the national government’s ordinary revenue collections, amid a higher obligation owing to the continued weakening of the shilling.
While the country’s debt currently stands at Sh10.25 trillion, the government plans to borrow more to meet its spending plans.
Treasury has revised the budget deficit upwards by Sh143.3 billion – from the initial Sh718 billion to Sh861.3 billion – in the current financial year.
Consequently, the government has set its eyes on lenders for the additional Sh143.3 billion to bridge the budget gap.
“In the financial year 2023-24 supplementary budget 1, the budget deficit has been revised upward to Sh861.3 billion,” Treasury PS Chris Kiptoo told a Parliamentary committee.
Kiptoo said that as a result of the deficit, the Treasury now aims to borrow Sh412.1 billion from external lenders against the initial target of Sh131.5 billion.
Net domestic financing has, however, gone down from Sh587.2 billion to Sh449.2 billion.