Jubilee to splash out trillions in push for pet projects in budget
The spending plan for the financial year starting in July has the hallmarks of an election budget, in which Jubilee splashes out billions of shillings on projects to fulfil its campaign pledges.
The government proposes to spend Sh2.62 trillion with significant expenditure on roads and infrastructure, energy as well as security and education amid goodies for the grassroots.
Key government pet projects — such as the standard gauge railway, the laptop for schools programmes and electricity distribution — enjoy huge allocations in the estimates released on Wedneday.
Apart from the 5.3 per cent drop in the allocation for development compared to last year, infrastructure, transport and logistics — including ongoing road constructions, the SGR, modernisation of ports, energy and housing — got the lion’s share of the budget, at Sh284.87 billion.
The new railway alone will take Sh75 billion with Sh9.7 billion set aside to finance the Last Mile Connectivity project.
There is also a Sh3 billion for buying transformers in constituencies, Sh1.53 billion for solar lanterns and a Sh1.3 billion connectivity subsidy in a bid to deepen electricity connection in homes and public places.
Also targeted in a big way is the education sector with the laptop programme taking Sh13.4 billion out of the Sh169.8 billion targeting recruitment of more teachers, upgrading of national schools as well as funding universities. An examination fee waiver, another popular proposal, has been allocated Sh4 billion.
Security is expected to take up Sh57.7 billion as plans to lease more police cars as well as enhanced security operations and border security get priority in an election year. Modernisation of the police and the military will cost Sh25.6 billion.
However, the estimates, presented by National Treasury Cabinet Secretary Henry Rotich, show that Kenya will be borrow to bridge a Sh582.5 billion deficit between the projected revenues and the planned expenditure.
The target for tax revenues, set at Sh1.3 trillion last year, has been adjusted upwards to Sh1.5 trillion in a move that will see the taxman raid more pockets to fund the budget.
Mr Rotich said the raising of the revenue projections was anchored on tax reforms.
“This performance will be underpinned by ongoing reforms in tax policy and revenue administration, through automation and inter agency-collaboration and connectivity,” Mr Rotich wrote in the estimates.
INCOME TAX LAW
He added: “The government will also complete the review of the income tax law so as to modernise it and align it to international practice.”
The budget also allocates Sh100 billion to a salary increment for all civil servants from July 1.
The government also set aside Sh7.3 billion for the ongoing irrigation projects countrywide, as well as towards helping to transform agriculture from subsistence to productive commercial farming.
The biggest allocation here will be Sh5 billion for input subsidy — including fertilisers and seeds — as well as some Sh1.6 billion for title deeds and Sh1 billion for the crop diversification for miraa (khat) farmers.
Kenya hopes that the economy, which experienced a drop to 5.7 per cent in the third quarter of 2016 from the 6.2 and 5.9 per cent in the second and first quarters, respectively, will grow at 5.9 per cent in 2017.
Agriculture and tourism recovery and the completion of roads and rail projects are expected to be the key anchors.
According to the proposed budget, which increased from the Sh2.48 trillion in the 2016/2017 financial year, the budgetary deficit has been pushed up by a one-off allocation for the SGR, without which it would been Sh469.6 billion.
The government will fill the gap by borrowing Sh206 billion from the external market and Sh328 billion from the local market.
The CS defended Kenya’s debt position and said the debt load will be reduced gradually in subsequent budgets.
The government has also allocated Sh640 million to help complete economic stimulus projects started in last year’s budget, including expansion of markets.
Apart from Parliament getting Sh38 billion for modernisation, CDF will make a return through the National Government Constituency Fund, which has received Sh30.9 billion.