This archive report was first published on 27 November 2019.
On November 27, 2019, the Parliamentary Budget and Appropriations Committee made significant revisions to the first proposed supplementary budget, effectively reducing the projected deficit from Ksh.92.1 billion to Ksh.37 billion.
The committee's amendments were largely driven by the discounting of new development projects, which were criticized for lacking funding in the original approved estimates.
As a result, the revised supplementary budget saw the slashing of fresh spending from Ksh.80.1 billion to Ksh.49.8 billion, narrowing the new financing gap to Ksh.55 billion.
The committee, led by Kimani Ichungwa, underscored the misalignment of revenues to projected economic growth and pointed to inadequate disclosures on new revenue sources.
“The supplementary budget has not indicated sources of fully financing the additional expenditures as per section 40 (6) of the Public Finance Management (PFM) regulations,” the committee stated.
The committee also expressed concern over the trimming of programs beyond the recommended 10 percent threshold and reprimanded the Treasury for further breaches to the PFM law.
Notably, the Budget committee reinstated the allocation to the Judiciary and Parliament's budgets, albeit with marginal cuts totaling Ksh.1.3 billion and Ksh.83.4 million, respectively.
However, the State department of infrastructure faced significant cuts, with key allocations to infrastructural projects being reduced or eliminated, including Ksh.2.3 billion from the JKIA-James Gichuru Expressway and Ksh.3.5 billion from the planned Textile Park in the Naivasha Special Economic Zone.
Despite this, the Ministry of Health was spared from cuts, with the allocation of Ksh.15.9 billion for the Universal Health Coverage (UHC) plan retained.
The committee's revisions have raised concerns about the scope for further borrowing, with the unmatched deficit set to raise uncertainty to fiscal management.
Analysts at Genghis Capital have warned that Parliament may turn a blind eye to the effective budget deficit, potentially setting the stage for the re-occurrence of mini-budgets in the future.
