The Government plans to spend Sh1.4 trillion in the 2012-2013 financial year up from Sh.1.15trillion spent last year according to Finance Minister Njeru Githae.

The finance minister said more emphasis will be on ensuring continued growth in the face of emerging domestic and global challenges, with emphasis on education, health, investment, infrastructure, ICT and the implementation of the new Constitution while maintaining a macroeconomic stability.

This was in line with this year’s theme of “Deepening our Economic and Social Prosperity within a System of Devolved Government”, thus, to achieve the end he said they were focusing on:

“Strengthening our financial systems by implementing further legislative and institutional reforms  to  keep  the  global  crisis  and  uncertainty  at  bay.  Scaling up infrastructure investments as the building blocks needed to achieve a more lasting and stable  growth;  and  making  growth  and  development  more  inclusive  and  equitable  across  counties  by  investing  in  our  people.”

With this he projected a growth of 5.2 percent for the country in 2012.

"The domestic and external shocks of 2008 and 2009 adversely affected growth, but following the return of peace in the country our economy rebounded in the year 2010 and remained resilient in 2011. We now project a growth of about of 5.2 percent in the year 2012."

This was with a reflection of deepening economic and social prosperity within a system of devolved government as the theme of this year's Budget.

The Finance minister said to sustain the growth in economy, Kenya needs ardent reforms in the public sector and deepening of regional integration, explaining that with optimism the economy set on a sustained path of higher growth in the medium term.

However, with projected revenue of about Sh 936 billion, Githae argued that the proposed budget suffers a deficit of a Sh. 279 million which will be replenished via grants from development partners to a tune of Sh56.2 billion, as well as government borrowing in the form of loans.

“With total expenditure of Ksh1,459.8 billion (inclusive of domestic and external debt redemption as well as contingency provisions), and total expected receipts of  Ksh.1,180.8  billion  (including  loans  and  grants),  the  overall  deficit  amounts  to  Ksh.279.0 billion as indicated in the Financial Statement circulated to Hon. Members.”

" However,  excluding  the  domestic  debt  rollover  of  Ksh.170.5  billion  from  expenditures and reflecting external debt redemption of Ksh.26.2 billion as a financing item, while at the same time reflecting loan external financing in a more acceptable international standard practice, total expenditure would amount to Ksh.1,263.2 billion, thus giving rise to an overall fiscal deficit of Ksh.250.3 billion (6.5 percent of GDP) after taking into account grants and LATF adjustment. This will be financed by net foreign financing of Ksh.143.6 billion and Ksh.106.7 billion net borrowing from domestic market,” he said,

Other measures that the minister proposed include: Facilitating private sector for growth and employment; Investing in people and supporting rural development; Promoting equity and fairness in the tax system; further reforming the tax system for efficiency and effectiveness; and strengthening financial sector stability for growth and employment. 

The minister thus disclosed that in sustaining the momentum of growth and sustainability, the budget had to focus on accelerating  growth  even  in  the  face  of  difficult  domestic  and  global environment; investing in infrastructure, especially in roads, energy, railways, and ports;  improving law and order to ensure security for people and upholding property rights; reforming the public service to make it efficient and effective in service delivery and facilitating private sector growth; providing adequate resources for priority social programmes in education and health; promoting equitable rural development and invest in agriculture to assure food security;  providing adequate resources for implementation of the constitution; and, set aside adequate resources for the General Elections. 

Githae pledged adequate support to the forthcoming election process as well as full constitution implementation allocating a Sh.17.5 billion to the electoral body IEBC for the general elections alongside Sh 3.69 billion for voter registration and Sh.3 billion for constitution implementation and reforms.

The presented estimates will mean that every Kenyan is entitled to Sh. 34,000 annually

However, analyst have warned of heavy spending, cautioning that it only serves to put the country in debt as well as positioning the country’s future at risk.

“Our expenditures are very high and they do not seem to be closing over time, we should have austerity measures to cut down on wastage and also to ensure that our budget reflects our capacity to receive in terms of revenue…yes we have debt, yes it is not out of hand, but it is not enough to compare ourselves to Greece and say that Greece has much debt and the fact that we have less we are better. Managing debt is managing how we spent and therefore, spending within our means is what the executive arm of government should have with parliament because we cannot continue spending huge sums of money and roll over debt into the future,” said Kwame Owino from the Institute of Economic Affairs.

Subsequently, the International Monetary Fund-IMF through its Resident Representative Ragnar Gudmundsson, projects projected Kenya's net public debt will dip below 40 percent of the Gross Domestic Product (GDP) by the end of the 2014/2015 financial year.

The IMF thinks that based on current trends and efforts on fiscal consolidation, net public debt to GDP ratio will be below 40 percent by the end of the 2014/2015 financial year," Mr Gudmundsson said on the sidelines of the launch of 2012 IMF Africa Economic Outlook at the University of Nairobi.

According to the IMF, total net public debt stands at 46 percent of GDP while the Treasury's target stands at 45 percent of GDP.

"Due to macroeconomic stability and efficient management of the economy, the level of public indebtedness is set to reach sustainable levels," the IMF representative said.

Roads Minister Frankline Bett with Vihiga Mp Yusuf Chanzu and Emuhaya Mp Wilbur Otichillo in Luanda where he commissioned the construction of the Majengo -Luanda Road and the Kima - Mustustwi road. [PHOTO | Cotron Alumasa | West Fm]

Infrastructure

Shortly after the Finance Minister Robinson Njeru Githae read the 2012/2013 financial year statement, Roads minister Frankline Bett put on notice contractors who play with public money and do shoddy work.

Mr. Bett, said he will not spare any contractor who takes long to finish his work only for poor work to be the end product yet huge amounts of money are paid to them.

He said with the money allocated to his ministry, his immediate task will be to repair the bad roads in the country and construct new ones.

He also revealed that his ministry had requested close to Sh160 billion, but was happy with the Ksh.123.6 billion, up from Ksh.104.3 billion in FY 2011/12 allocated to his ministry.

Bett said he will strive to have the funds utilized properly.

Education Minister Mutula Kilonzo said he was not satisfied yet but accepted the allocation directed to his ministry saying education must be prioritized. The ministry was allocated an additional Ksh.19.2 billion , raising the total allocation by 9 percent to reach Ksh.233.1 billion in FY 2012/13 that would cater for the expanded enrolment at all levels of education and training through increased infrastructure and teaching staff.

On his part, the Parliamentary Education Committee chairman David Koech however, said he was not happy since the Finance minister did not allocate any funds towards recruitment of teachers.

He said the government has not been keen on honouring its pledge to recruit at least 28,000 teachers every year as outlined in the Vision 2030.

Koech said it could have been much better had Githae considered setting aside more funds to recruit more teachers to balance with the large percentage of students and pupils being admitted in schools due to the Free Education Programme.

Energy minister Kiraitu Murungi on his side said the estimates were well put and that all that remains is for the government to implement the said projections.

He however said he would have been happier had his ministry received funds for Rural Electrification which he said is important to spur economic growth for the country.

Nonetheless, he said he will work under the allocated Ksh.79.9 billion, up from Ksh.57.5 billion in 2011/12 to see to it that all Kenyans have access to power.

Water and Irrigation minister Charity Ngilu was however, unhappy as she said no money had been directed to the development of water dams across the country.

She said, through dam construction and development, the country will be able to harvest rain water for agricultural development to spur food production across the country.

She said instead of the huge amounts of money channeled to the Ministry of Special Programmes for importing food when need be, it could have been useful in promoting food production locally.

However, she applauded the allocation to the security department and education saying it was a good gesture by the Finance minister.

Parliamentary Agriculture committee member Ben Washiali on his parts said the irrigation programme which got a boost from the treasury was a noble one terming it a milestone in the history of the country’s agriculture sector.

He further said it was important that the minister indicated the country could be on its way to fertilizer production.

Mt Elgon MP Fred Kapondi however, faulted the minister for cutting down the proposed number of police recruits but was happy with the priority the security department was accorded.