Kenya Presents a Kes1.642B as it registers 356.9 Deficits

Kenya presented its Kes1.642b fiscal budget with the aim of fostering the economic posterity in the growing economy as we are the process of realizing the set vision 2030. The cabinet secretary for National treasury Rotich began his speech the statement that Majority of Kenyans are still food insecure and the government is in the aim of creating more jobs for the youth and women.

The cabinet secretary farther underlined that the key issue in the budget reading is how the state plans revenue to finance the trillion budget and track the controlled economy as the country sets its foot on the devolved system of governance.

Kenya projected that the global economic growth is expected to grow by 3.3% in 2014 and denotes that it remains resilient of 4.6% of 2012/3. The jubilee government however projects the economic growth to 5.8% and also plans to create a million jobs yearly. As the country resiliently fights to curb the growing territorial insurgency the government invested heavily on the capacity building in the security apparatus and therefore it is expected to use kes67 billion for modern security equipment in the National police service.

As opposed to the claims by the council of governors and the senate on the allocation of kes210billion, the government has reiterated that the central government fully supports the devolved governments and therefore said that those who are not in a position to offer the devolved services will be fully backed by the government.

The cabinet secretary noted that Kenya as a country is facing hard budget constraints, difficult choices must be made in this year allocations.

On transport the government allocated kes22billion has been set aside to build railway line from Mombasa to Kisumu, on road expansion and rehabilitation the treasury allocated kes97.9billion.

We are working towards removing the customs procedures in the EAC region

The treasury allocated kes16.1b to the judiciary to continue with the ongoing reforms and kes1.5b to the DPP for crime research.

The treasury kes8billion allocated for irrigation and farther kes2billion allocated for Agriculture business fund and said that the government shall hasten the process for registration of business for the youth, women and persons with disabilities.

The jubilee government farther plans to use Kes6billion to be allocated to the Youth to start income generating projects in the fiscal year 2013/14. The treasury proposed to amend the procurement law to reduce the requirements of 30 days.

On education the government farther plans to use 10.3bn towards free primary education and farther kes53.2B for deployment of laptops and the development of digital content of the same purpose. The treasury has farther allocated kes2.6billion for school feeding programme.

Farther the treasury has allocated kes1.7b for bursary and kes4 Helb to facilitate the access to loans for the learning students in Kenya.

On heath the treasury allocated kes200million for health institutions in the slums areas in the cities while kes10.6billion has been proposed for the access of free maternal healthcare

Farther kes770milion has been set to be used by the Kenyans with extreme disability and 100million allocated to those with albinism. As a move to support the increasingly number of orphans in Kenya, the Treasury allocated kes8billion to vulnerable children in 310,000 Kenyan households.

The cabinet secretary said that the government is going to scale up the tax policies in order to raise the total 1.642trillion to finance the historic budget. The secretary said that the budgeted revenue is 24% of the gross domestic product GDP. The treasury said that the budget has a gross recurrent expenditure of kes955billion and the government has confirmed external grants of Kes67.4billion. The treasury said that the huge budget deficit stands at kes356.9billion as the treasury expects kes246billion from the ex-checker.

On the salaries of the constitutional office holders, the jubilee government is expected to spend kes3.4billion and farther kes1.4billion for debt payment and kes210billion on the devolved governments.

Exemptions and Increments

To help raise the huge revenues required to finance the budget the treasure propose to increase the Import duty on welding tools up to 25% from 10%, to impose tax on the landlords in the urban areas by December 2013, amend the law on the real estate, and introduce to parliament the VAT bill with aims to simplify, modernize and reduce the costs of compliance and raise extra kes10billion.

In order to implement the rail project from Mombasa to Kisumu, the treasury proposed to exempt tax on items used to develop rail transport. In order to support the local productions the secretary proposed to increase import duty on electronics and plastic packaging materials

Treasury farther seeks to amend the Customs law to be to charge rent in the port of Mombasa to reduce the container backlog.

To implement the common Market protocol of the EAC, the treasury proposed to overhaul the Insurance Act by September 2013 so as to allow nationals of the EAC to be treated as Kenyans in the ever expanding insurance industry.

However as we break down the expenses the devolution was expected to be fully supported by the budget but the Kshs210 billion shilling allocation is deemed to be very little for the new regimes we have in the 47 counties.

As opposed to the former budgets this fiscal year allocations was approved by Parliament after debating it for two months. With the high rate of unemployment and implementation of the said laptop project the jubilee government is faced by the challenge of getting the country working with the reduction of wage bill without unnecessarily imposing taxes to Kenyans.

If the current fiscal year closing at June 30th, the increased wage bill due to the creation of new offices such as cabinet secretaries, governors, senators and expanded National Assembly the government maybe pushed to make borrowings to boost the 900 billion projected tax to be raised by the KRA. Currently the Treasury is expected to draw Kes246billion from the Ex-checker and if the VAT is passed by the parliament then the government shall pocket close to Ksh10billion in its annual revenue collection.

Teachers have a reason to smile after the Teachers Service Commission has been allocated Sh143.1 billion as gross total expenditure. This comes at a time when the Post Primary Teachers have given a strike notice if their allowances aren’t revised upwards by June 18. The Ministry of Education, Science and Technology has been allocated Sh130.5 billion made up of Sh97.1 billion as recurrent expenditure and Sh33.5 billion as development expenditure.

Others are Ministry of Transport and Infrastructure, which has been allocated Sh125.7 billion (Sh102.9 billion in development expenditure and Sh22.8 billion in recurrent expenditure), Ministry of Interior and Coordination of National Government will be allocated Sh108.9 billion. The Ministry of Devolution and Planning has been allocated Sh84.8 made up of Sh16 billion in recurrent and Sh68.3 billion in development expenditure.

With the donors contributing only 67.4b which translates to 4% of the total projections, the government expects to raise kes900b (54.8%) and kes246b from the ex-checker the government remains with a huge deficit of 356.9billion shilling which translates to 21% of the total fiscal spending for the government.

We shall compare the budgets of the EAC states later tonight to underline the major spending. However you should note that Burundi does not read its budget in June but December. Kindly email feedback to kilonzofelix@gmail.com or tweet me @starkolix