This archive report was first published on 16 June 2020.
On June 16, 2020, the government unveiled a Sh3.2 trillion budget, but the figure that has been widely reported is Sh2.73 trillion. The discrepancy arises from debt redemptions, which are considered spending for accounting purposes.
However, in strict application of the Public Finance Management laws, debt redemption is considered spending because it is a discretionary obligation that the government must meet. Therefore, from a legal perspective, the budget is Sh3.2 trillion.
The Parliamentary Budget Office, which guides Parliament on the strict application of the Public Finance Laws during budgeting, has stated that the budget is Sh2.7 trillion as presented by the Treasury.
Despite the controversy over the budget figure, the allocation to the Health sector was impressive at Sh111.7 billion, which is 4.2 percent of total spending. This includes Sh42.6 billion allocated to the development of water and sewerage, providing a good financial muscle to manage the headwinds of the coronavirus pandemic.
However, the allocation of Sh50.3 billion for activities and programmes for the attainment of Universal Health Coverage has raised concerns. The government has been silent on what policy plan it intends to implement, and Parliament needs to thoroughly look into this budget item when the Appropriations Bill is presented.
Another issue with the budget is the allocation of close to Sh200 billion to health, water, and sanitation, but the lack of a robust safety protection programme. The government has misinterpreted what a fiscal stimulus programme really is, with tax reliefs and incentives, VAT refunds, and pending bills payment not being stimulus items.
A fiscal stimulus means government injecting money directly to stabilise the economy. In Kenya, a Sh200 billion safety protection programme would be a good start, but the government needs to re-allocate budget items to make it effective.
For example, the Sh10 billion allocated to irrigation in the name of food security could be better spent on providing farmers with inputs, as agricultural farming is Kenya's biggest employer. The government should also have allocated a sizable share to the school feeding programme, which has been effective in the fight against food and nutrition insecurity.
