Kenya’s National Assembly Budget and Appropriations Committee (BAC) has slashed governments’ spending to Ksh 49.77 billion from Ksh 86.60 billion in its Supplementary Estimates for FY 2019 2020.
The committee chaired by Kimani Ichung’wah in its report, says Kenya’s total public debt stands at Ksh 5.9 trillion as of September 2019 with an expected deficit of Ksh 640 billion for FY 2019/20.
“Given the expected underperformance in ordinary revenue collection, any additional amount approved during this supplementary will determine the extent to which the deficit will increase and the financing of the same, ultimately, this will have an impact on debt accumulation.”
If approved, the committee sais the level of debt my hit Ksh 6.7 trillion mark by the end of the current financial year.
The committee said there was a need to separate the budget-making function from resource mobilisation in so far as the borrowing ios concerned.
“There is a need to institute a robust and independent debt management office that must be established outside the National Treasury…The office shall oversee the preparation and implementation of a debt plan geared towards efficient management od Kenya’s external and domestic debt obligations as sustainable levels compatible with desired economic activities for growth.”
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Changes being proposed by BAC is an overall increase of Ksh 49.77Bn in FY2019/20 Supplementary Budget I Estimates comprising of an increase of Ksh 50.57Bn in development spending and a reduction of Ksh 799.02Mn in recurrent expenditure.
“This is a reduction (of Ksh 30.33Bn) from the initial increase of Ksh 80.10Bn proposed by the National Treasury,” according to Genghis Capital FY2019/20 Supplementary Budget 1 BBI 2.0 themed Bridging Budget gap Inability?
Parliament and Judiciary, BAC is proposing a reduction from the initial approved budget by Ksh 1.31Bn and Ksh 220.00Mn, respectively.
The committee says the proposed estimates would ‘likely occasion to a financing gap of Ksh 146.3 billion.
“This financing gap will be financed through additional financing of Ksh 26.2 billion and Ksh 1.7 billion of local AiA collection.”
However, given the likelihood of underperformance of the revenue collection for FY 2019/20, the committee said the gap will have to met from additional borrowing either domestically or externally.