National Treasury makes drastic cuts in 2020/21 financial year allocations

Thursday, February 20th, 2020 07:19 |
National Treasury Cabinet Secretary Ukur Yatani. Photo/PD/FILE

The National Treasury has made drastic budgetary cuts to the 2020/21 financial year which has affected all the three arms of government, a move attributed to low revenue performance.

Treasury has reduced allocations to the National Government by a whopping Sh200 billion, from Sh2.06 trillion allocated in the last financial year to Sh1.83 trillion.

Allocations to the Executive have been reduced from Sh1.94 trillion to Sh1.77 trillion.

The Judicial Service Commission (JSC) which has been complaining of budgetary constraints has had its allocation cut by over Sh1 billion, from Sh19.5 billion to Sh17.8 billion.

Parliament has also been affected after allocations to the Parliamentary Service Commission (PSC), were slashed by a massive Sh2 billion.

National Treasury Cabinet secretary Ukur Yattani (pictured) says in the 2020 Budget Policy Statement (BPS) tabled before Parliament last week, that the baseline estimates reflect the current ministerial spending levels in sector programmes.

Policy statement

Parliamentary Budget Office Deputy Director Martin Masinde told the People Daily that the country’s revenues are not growing despite the fact that the economy is performing.

“Our revenues are not performing in line with the economy. The economy is growing and we are collecting less. From the past experience where there have been over projecting revenue this time round they have been very modest,” he said.

 “The budget has been going down mainly due to under performance of revenue and also the fact that they want to slow down on borrowing,” he added.

Budget experts he said, were working to establish why the economy was growing  yet revenues are falling saying it is an empirical question that needs to answered.

According to Yattani, emphasis has been  given to completion of on-going capital projects and in particular infrastructure projects with high impact on poverty reduction, equity and employment creation.

“Priority has also been given to adequate allocations for donor counterpart funds which is the portion that the government must finance in support of the projects financed by development partners,” said the CS.

Explain proposal

Budget committee in the National Assembly chair Kimani Ichung’wa said his committee will be meeting Treasury today for the CS to explain his proposals.

Treasury has proposed a Sh2.7 trillion budget in the next financial year (FY) as the government pursues a fiscal consolidation policy towards debt sustainability.

The figure proposed for FY 2020/21 was tabled in Parliament yesterday with a marginal decrease from the Sh2.87 trillion proposed in the 2019/20 financial year budget even as the government ring fences cash for the Big Four agenda.

Of the Sh2.7 trillion the government plans to spend, Sh1.78 trillion (15.3 per cent of the gross domestic product) will go to recurrent expenditure while Sh587.3 billion (five per cent of GDP) will go to development.

Within the same period, Treasury projects revenues collected to increase to Sh2.1 trillion in FY2020/21 up from Sh2.08 trillion in the FY2019/20. This financial year, fiscal deficit is expected to reduce to Sh571.2 billion down from 657.4 billion in FY2019/20.

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