First Supplementary Budget Estimates for FY 2022/23 in Kenya: Insights, Issues, and Discussion
Category: BudgetBudget Expenditure
By: John Mutua,
On 14th February 2023[i], the Leader of the Majority Party in the National Assembly laid supplementary Estimates 1 for FY 2022/23 from the National Treasury and Economic Planning. This document was presented in two versions: (i) Progamme Based Budget (PBB) and (ii) line item based for both Recurrent Estimates (volumes I and II) and Development Estimates (Volumes I, II and III).
Although information on the exact date when the National Treasury tabled these budget documents at the National Assembly is not mentioned, it is safe to assume that this happened in the week of 6th of February 2023. Commendably and for the first time ever, on 11th February, an advertisement in a leading newspaper daily was posted by the National Assembly inviting the public to submit memoranda with their views and representation on the estimates. This is notably a progressive step towards enshrining public participation in the discussion of supplementary budgets before their approval and thus enhancing Kenya’s overall budget transparency level.
In the past, tabling of the supplementary budget by the National Treasury, its scrutiny and consequently approval by the National Assembly has passed uneventful, save for a newspaper article here and there. For the FY 2022/23however, going by the media attention, there has been heightened anticipation of supplementary budgets. This was set during President Ruto’s inaugural speech on 13th September 2023 when he announced, among other things that his administration will cut the budget for FY 2022/23 by Ksh 300 billion in pursuit of expenditure rationalization measures. The not so obvious question, then, was whether this was possible given that Ksh 300 billion is not small by any measure. This amount is nearly a tenth (or 2.1% of GDP) of Ksh 3.36 trillion, the approved budget for FY2022/24. In other words, to cut the budget by Ksh 300 billion is equivalent to doing away with the Teacher Service Commission or cynically doing away with parliament for six financial years. Besides, the approved budget for FY 2022/23 prepared under President Ruto’s predecessor was nearly three months into implementation, which implies limited room for adjustments.
What is a Supplementary Budget and what is its purpose?
Supplementary budgets, as provided for in Article 223 of the Constitution arise from the need to revise or adjust the original budget during the year and in the course of its implementation owing to a number of reasons. The most common one arises from emergencies or unforeseen events, such as the COVID-19 pandemic or terrorism. Such events call for additional funding. The other reasons include, situations that lead to realization of additional funds for example, savings from revisions of programs and external funding through budgetary support where the executive must seek approval from parliament to appropriate these funds. Cases of lack of funds, necessitating budget cuts are the other notable reasons.
Contextually, decisions made regarding this Supplementary Budget for FY 2022/23 are informed by the need to align implementation of this budget to the new government administration, to align it with the Kenya Kwanza manifesto and with the expectations of citizens regarding the agenda to be accomplished by the President,. Executive Order No.1 on organization of government, fiscal consolidation programme and implementation of the 38-month IMF programme are the other contextual factors. Specifically, the pressure to cut the budget by Ksh 300 billion was seen as a way to reduce overall expenditure owing to the limited resources available after factoring funds for servicing of the growing public debt levels in the country.
What is the change from the approved budget and is there a shift in priorities?
A review and analysis of the first Supplementary Budgets for FY 2022/23 sheds light on the reasons for revision of the original budget. Was this in line with what the new government administration has promised? And if so, is it within the legal bounds as provided for in the Public Finance Management Act, 2012?
According to the Supplementary I Budget Estimates for FY 2022/23, the National Treasury proposes to reduce the overall budget by Ksh 13.3 billion, which is less than one percent from what was approved by end of June 2022 (from Ksh 2.12 trillion to Ksh 2.11 trillion). This comprises an increase in recurrent expenditure of Ksh 93 billion (6.6%) and a decrease in development expenditure of Ksh 106.3 billion (14.9%).
I observe that as much as the proposed revision of the budget is downwards, the national executive budget falls short by a huge margin, if the budget for FY 2022/23 is cut by Ksh 300 billion as declared by the President. The question, therefore is why would the President make such a statement that seems to endanger essential service delivery to the population? Of course, there could be another round of budget revision to make up for the short-fall before the end of the financial year; and whether or not the President’s resolve on rationalization of spending will be realized remains to be seen.
Further breakdown of first Supplementary Budget Estimates reveals interesting insights regarding movements of MDAs (Ministries, Department and Agencies) allocations, upwards or downwards and by recurrent and development expenditure. Of the three arms of government, there is no proposed adjustment to the approved budget for parliament. By contrast, the national executive budget is proposed to reduce by less than one percent (Ksh 2.05 trillion to Ksh 2.03 trillion) while that for the Judiciary is proposed to go up significantly by 16.6% (Ksh 18.9 billion to Ksh 22.0 billion) towards enhancing access to justice. Since the source of funds for this additional funding is not specified, there are lingering questions as to whether the promised funds will be forthcoming.A physical count of the 81 MDAs shows that proposed upwards revisions are targeted for 33 MDAs whereas downwards revisions are for 44. No change was proposed for 4 MDAs including Parliamentary entities as noted above and for Witness Protection Agency.
Table 1 highlights the biggest proposed changes, upwards (positive) and downwards (negative) for MDAs. By implication adjustment of budgets for these MDAs reveals changes to respective programmes and sub-programmes and whether there is shift in priorities or not from the original budget.
Table 1: Largest Proposed Budget Revisions by MDAs, Upwards or Downwards in Absolute and Relative Terms
Source: Republic Of Kenya 2022/23 Supplementary Estimates I for the Year Ending 30th June, 2023 January 2023
The largest proposed increase in allocation, in absolute terms is to the Ministry of Petroleum and Mining, by Ksh 41.8 billion which is attributed to oil market price stabilization. Not much detail is provided here, as the fuel subsidies programme introduced by the previous administration in response to rising cost of living has already been phased out. Equally, allocation of Ksh 3.6 billion to cater for fertilizer subsidy during the short and long rains and separately transfer of devolved functions, payment of arrears to sugarcane farmers are attributed to a combined increase in the allocation to the State Department for Crop Development and Agricultural Research of Ksh 25.1 billion. Notably Free Secondary education budget is proposed to go up by Ksh 13.7 billion to cover approximately 1.3 million students and hence the reason for overall upward revision of the State Department for Early Learning & Basic Education allocation.
The National Police Service as one of the new MDAs is allocated Ksh 24.4 billion to enhance public safety and security in the country. Establishment of Financial Inclusion Fund, famously dubbed as the Hustler Fund which was at the centre of the new administration’s campaign plank also features prominently in the Supplementary budget. About Ksh 20 billion is allocated to this fund, targeting micro, small and medium enterprises. The need to ensure that the Hustler Fund is inclusive seems to be the main reason behind the proposed budgetary increase to the State Department for Cooperatives. The National Police Service, a new MDA is allocated Ksh 24.4 billion to cater for enhancing public safety and security.
By contrast, the largest proposed downwards revisions is to two related MDAs, namely, the State Department of Infrastructure and the Ministry of Energy, each of which will get Ksh 47.3 billion and Ksh 41.7 billion, respectively. Besides, for further expenditure rationalization, the budget for the State Department for Interior and Citizen Services is proposed to be cut by Ksh 31.6 billion. Social sector ministries are often a culprit for budget cuts. This was no exception in the FY 2022/23 supplementary as Ksh 24.2 billion was proposed to be reduced from the Ministry of Water & Sanitation and Irrigation budget. On the positive side, the newly created State Department for Irrigation was allocated Ksh 1.53 billion in part towards investments that is expected to raise agricultural productivity, through provision of irrigation and drainage services.
All in all, the overall picture of sector priorities has not changed from the original budget. However, the proposed reduction in budgets for the two infrastructure-related MDAs implies that completion of the planned transport and energy projects will likely be delayed.
Highlights and discussion of the Emerging Issues
- Is the government on course in its fiscal consolidation agenda?
Often supplementary budgets lead to widening budget deficit[ii] and as a result to higher borrowing. This first Supplementary Estimates for FY 2022/2 is however expected to reduce the deficit from 6.2% of GDP based on the original budget to 5.7%.
The graph shows overall expenditure is projected to increase from Ksh 3.36 trillion to Ksh 3.39 trillion. Although information on how these expected expenditure adjustments are to be financed is not presented as part of the supplementary Budget Estimates that was tabled before the National Assembly as required under in section 40(6) of the PFM regulations, I teased out this information from the Budget Policy Statement 2023.Total revenue inclusive of grants is expected to increase driven by expected rise in receipts from tax and non-tax sources.
In as much as tax revenue targets were achieved in 2021/22, the revenues from borrowings did not materialize as expected leading to an overall shortfall in funds by 9%, with adverse effects on budget implementation. Already there are signals that revenue performance in FY 2022/23 may be dampened. In the first half year of FY 2022/23 for example, total revenue collection fell short of target by Ksh 11.1 billion[iii]. Despite the fact that revenue collection picks in the second half of every financial year, it performance is likely to be affected adversely owing to persistent drought, and external factors may dampen economic activity.
It is important that the National Treasury ensure that information of how supplementary budgets will be financed is provided to facilitate interrogation and analysis of whether targets for fiscal deficits are realistic or not and implication thereof.
- Legal breaches and fiscal implication of introduction of new expenditure lines
According to the President’s Executive Order No.1[iv] dated January 2023, it was expected that the new administration will reorganize the government according to their manifesto. This re-organization is evident in the first Supplementary Estimates which capture introduction of 13 new MDAs[1] (two dropped/merged from the previous financial year-State Department of Broadcasting and Telecommunication and Witness Protection Agency). I note that this is not only against section 40(8) of the Regulations to the PFM Act, 2012 but that it will lead to cost escalation in the running of the national government. Furthermore, new programmes introduced in the course of the financial year (in-year) undermine the prudence principle of the Medium Term Expenditure Framework.
- Budget revisions undermine administration’s adherence to fiscal responsibility principles
Often, supplementary budget negate fiscal responsibility principles observed in budgeting. If the proposed revisions as per the first Supplementary budget Estimates 2023/24 are upheld, the share of development expenditure to total budget will reduce to 28% below the recommended threshold of at least 30%. Therefore, the National Assembly should note that even with improved absorption rates for development budget, substantial reduction will breach government’s fiscal responsibility requirements.
- Financial information on proposed budget revision is not always accompanied by comprehensive non-financial information
Overall review of the first supplementary budget reveal improvement in the level of information provided. However it is important to note that most of this information is financial but not always accompanied by comprehensive non-financial information (for example on targets, indicators, etc). Yes, there is improvement on, for instance, revised targets where budgetary allocations have been proposed for adjustment. Justification for suggested adjustments is to a large extent missing, and where it is provided, it is vague; yet such information is not only critical in providing valuable insights and enabling understanding of financial information but also aids in enhancing overall decision making process. For example, the justification provided for revisions in the health ministry’s approved estimates is “…rationalization of the budget and transfer of functions”. It is therefore not clear why the roles are being transferred; and in some cases the roles being transferred have not been indicated in the supplementary budget.
Conclusion
The intention of this blog piece is to highlight some insights and issues analyzed from my review of the first Supplementary Budget for FY 2022/24 towards contributing to elevated public dialogue and oversight on the use of public funds. It is clear and as provided for in the law that supplementary budgets are necessary depending on the socio-economic situation of a country in particular points in time. However supplementary budgets can be abused and may be a conduit for financial mischief. This is the reason why the law makes provision for certain checks and balances in budgetary processes.
I acknowledge the National Assembly’s efforts in ensuring public participation in supplementary budgets for the first time and call for civil society vigilance on this to ensure that this practice is maintained going forward.
The intentions of the supplementary budgets are clear enough but what is not as clear, is whether financing to meet the proposed adjustments will be realized to ensure that the government is on track in realizing its fiscal consolidation agenda. It is also important to note certain political decisions, of reorganizing government have legal and fiscal implications. Furthermore limited explanation and justification for budget adjustments limits overall transparency and accountability of supplementary budgets.
I therefore recommend that the National Treasury should, going forward, ensure provision of comprehensive information on estimates of supplementary, financial and non-financial budgets to ensure facilitation of meaningful public engagements and oversight on budgets and expenditures. At the same time, there is need to be aware that historical trends of supplementary budgets in Kenya signal that budget revision is increasingly becoming a habit which is symptomatic of poor planning. If these good public finance management practices are observed, they would lead to improved fiscal discipline and ultimately to better service delivery to citizens.
[1]They include: 1176 State Department for Miro, Small and Medium Enterprises Development; 1194 Ministry of Petroleum and Mining; 1281 National Intelligence Service; 1332 State Department for Forestry; 1012 Office of the Deputy President; 1013 Office of the Prime Cabinet Secretary; 1024 State Department for immigration and Citizen Services; 1025 National Police Services; 1026 State Department for Internal Security and National Administration; 1053 State Department for Foreign Affairs; 1054 State Department for Diaspora Affairs; 1083 State Department for Public Health and Professional Standards and 1104 State Department for Irrigation
[i]National Assembly Hansard Report, Tuesday 14th February 2023 via http://www.parliament.go.ke/sites/default/files/2023-02/Hansard%20Report%20-%20Tuesday%2C%2014th%20February%202023%20%28P%29.pdf
[ii] Office of Controller of Budget Implementation and Review Reports for 2022/21
[iii]National Treasury Budget Policy Statement 2023 via
[iv] Republic Of Kenya Organization Of The Government Of The Republic Of Kenya January, 2023 Issued By The Executive Office Of The President via https://mfa.go.ke/wp-content/uploads/2023/01/Executive-Order-No.-1-of-2023-Organization-of-the-Government-of-Kenya.pdf
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First Supplementary Budget Estimates for FY 2022/23 in Kenya: Insights, Issues, and Discussion
| Post date: Tue, Mar 7, 2023 |
| Category: BudgetBudget Expenditure |
| By: John Mutua, |
On 14th February 2023[i], the Leader of the Majority Party in the National Assembly laid supplementary Estimates 1 for FY 2022/23 from the National Treasury and Economic Planning. This document was presented in two versions: (i) Progamme Based Budget (PBB) and (ii) line item based for both Recurrent Estimates (volumes I and II) and Development Estimates (Volumes I, II and III).
Although information on the exact date when the National Treasury tabled these budget documents at the National Assembly is not mentioned, it is safe to assume that this happened in the week of 6th of February 2023. Commendably and for the first time ever, on 11th February, an advertisement in a leading newspaper daily was posted by the National Assembly inviting the public to submit memoranda with their views and representation on the estimates. This is notably a progressive step towards enshrining public participation in the discussion of supplementary budgets before their approval and thus enhancing Kenya’s overall budget transparency level.
In the past, tabling of the supplementary budget by the National Treasury, its scrutiny and consequently approval by the National Assembly has passed uneventful, save for a newspaper article here and there. For the FY 2022/23however, going by the media attention, there has been heightened anticipation of supplementary budgets. This was set during President Ruto’s inaugural speech on 13th September 2023 when he announced, among other things that his administration will cut the budget for FY 2022/23 by Ksh 300 billion in pursuit of expenditure rationalization measures. The not so obvious question, then, was whether this was possible given that Ksh 300 billion is not small by any measure. This amount is nearly a tenth (or 2.1% of GDP) of Ksh 3.36 trillion, the approved budget for FY2022/24. In other words, to cut the budget by Ksh 300 billion is equivalent to doing away with the Teacher Service Commission or cynically doing away with parliament for six financial years. Besides, the approved budget for FY 2022/23 prepared under President Ruto’s predecessor was nearly three months into implementation, which implies limited room for adjustments.
What is a Supplementary Budget and what is its purpose?
Supplementary budgets, as provided for in Article 223 of the Constitution arise from the need to revise or adjust the original budget during the year and in the course of its implementation owing to a number of reasons. The most common one arises from emergencies or unforeseen events, such as the COVID-19 pandemic or terrorism. Such events call for additional funding. The other reasons include, situations that lead to realization of additional funds for example, savings from revisions of programs and external funding through budgetary support where the executive must seek approval from parliament to appropriate these funds. Cases of lack of funds, necessitating budget cuts are the other notable reasons.
Contextually, decisions made regarding this Supplementary Budget for FY 2022/23 are informed by the need to align implementation of this budget to the new government administration, to align it with the Kenya Kwanza manifesto and with the expectations of citizens regarding the agenda to be accomplished by the President,. Executive Order No.1 on organization of government, fiscal consolidation programme and implementation of the 38-month IMF programme are the other contextual factors. Specifically, the pressure to cut the budget by Ksh 300 billion was seen as a way to reduce overall expenditure owing to the limited resources available after factoring funds for servicing of the growing public debt levels in the country.
What is the change from the approved budget and is there a shift in priorities?
A review and analysis of the first Supplementary Budgets for FY 2022/23 sheds light on the reasons for revision of the original budget. Was this in line with what the new government administration has promised? And if so, is it within the legal bounds as provided for in the Public Finance Management Act, 2012?
According to the Supplementary I Budget Estimates for FY 2022/23, the National Treasury proposes to reduce the overall budget by Ksh 13.3 billion, which is less than one percent from what was approved by end of June 2022 (from Ksh 2.12 trillion to Ksh 2.11 trillion). This comprises an increase in recurrent expenditure of Ksh 93 billion (6.6%) and a decrease in development expenditure of Ksh 106.3 billion (14.9%).
I observe that as much as the proposed revision of the budget is downwards, the national executive budget falls short by a huge margin, if the budget for FY 2022/23 is cut by Ksh 300 billion as declared by the President. The question, therefore is why would the President make such a statement that seems to endanger essential service delivery to the population? Of course, there could be another round of budget revision to make up for the short-fall before the end of the financial year; and whether or not the President’s resolve on rationalization of spending will be realized remains to be seen.
Further breakdown of first Supplementary Budget Estimates reveals interesting insights regarding movements of MDAs (Ministries, Department and Agencies) allocations, upwards or downwards and by recurrent and development expenditure. Of the three arms of government, there is no proposed adjustment to the approved budget for parliament. By contrast, the national executive budget is proposed to reduce by less than one percent (Ksh 2.05 trillion to Ksh 2.03 trillion) while that for the Judiciary is proposed to go up significantly by 16.6% (Ksh 18.9 billion to Ksh 22.0 billion) towards enhancing access to justice. Since the source of funds for this additional funding is not specified, there are lingering questions as to whether the promised funds will be forthcoming.A physical count of the 81 MDAs shows that proposed upwards revisions are targeted for 33 MDAs whereas downwards revisions are for 44. No change was proposed for 4 MDAs including Parliamentary entities as noted above and for Witness Protection Agency.
Table 1 highlights the biggest proposed changes, upwards (positive) and downwards (negative) for MDAs. By implication adjustment of budgets for these MDAs reveals changes to respective programmes and sub-programmes and whether there is shift in priorities or not from the original budget.
Table 1: Largest Proposed Budget Revisions by MDAs, Upwards or Downwards in Absolute and Relative Terms
Source: Republic Of Kenya 2022/23 Supplementary Estimates I for the Year Ending 30th June, 2023 January 2023
The largest proposed increase in allocation, in absolute terms is to the Ministry of Petroleum and Mining, by Ksh 41.8 billion which is attributed to oil market price stabilization. Not much detail is provided here, as the fuel subsidies programme introduced by the previous administration in response to rising cost of living has already been phased out. Equally, allocation of Ksh 3.6 billion to cater for fertilizer subsidy during the short and long rains and separately transfer of devolved functions, payment of arrears to sugarcane farmers are attributed to a combined increase in the allocation to the State Department for Crop Development and Agricultural Research of Ksh 25.1 billion. Notably Free Secondary education budget is proposed to go up by Ksh 13.7 billion to cover approximately 1.3 million students and hence the reason for overall upward revision of the State Department for Early Learning & Basic Education allocation.
The National Police Service as one of the new MDAs is allocated Ksh 24.4 billion to enhance public safety and security in the country. Establishment of Financial Inclusion Fund, famously dubbed as the Hustler Fund which was at the centre of the new administration’s campaign plank also features prominently in the Supplementary budget. About Ksh 20 billion is allocated to this fund, targeting micro, small and medium enterprises. The need to ensure that the Hustler Fund is inclusive seems to be the main reason behind the proposed budgetary increase to the State Department for Cooperatives. The National Police Service, a new MDA is allocated Ksh 24.4 billion to cater for enhancing public safety and security.
By contrast, the largest proposed downwards revisions is to two related MDAs, namely, the State Department of Infrastructure and the Ministry of Energy, each of which will get Ksh 47.3 billion and Ksh 41.7 billion, respectively. Besides, for further expenditure rationalization, the budget for the State Department for Interior and Citizen Services is proposed to be cut by Ksh 31.6 billion. Social sector ministries are often a culprit for budget cuts. This was no exception in the FY 2022/23 supplementary as Ksh 24.2 billion was proposed to be reduced from the Ministry of Water & Sanitation and Irrigation budget. On the positive side, the newly created State Department for Irrigation was allocated Ksh 1.53 billion in part towards investments that is expected to raise agricultural productivity, through provision of irrigation and drainage services.
All in all, the overall picture of sector priorities has not changed from the original budget. However, the proposed reduction in budgets for the two infrastructure-related MDAs implies that completion of the planned transport and energy projects will likely be delayed.
Highlights and discussion of the Emerging Issues
- Is the government on course in its fiscal consolidation agenda?
Often supplementary budgets lead to widening budget deficit[ii] and as a result to higher borrowing. This first Supplementary Estimates for FY 2022/2 is however expected to reduce the deficit from 6.2% of GDP based on the original budget to 5.7%.
The graph shows overall expenditure is projected to increase from Ksh 3.36 trillion to Ksh 3.39 trillion. Although information on how these expected expenditure adjustments are to be financed is not presented as part of the supplementary Budget Estimates that was tabled before the National Assembly as required under in section 40(6) of the PFM regulations, I teased out this information from the Budget Policy Statement 2023.Total revenue inclusive of grants is expected to increase driven by expected rise in receipts from tax and non-tax sources.
In as much as tax revenue targets were achieved in 2021/22, the revenues from borrowings did not materialize as expected leading to an overall shortfall in funds by 9%, with adverse effects on budget implementation. Already there are signals that revenue performance in FY 2022/23 may be dampened. In the first half year of FY 2022/23 for example, total revenue collection fell short of target by Ksh 11.1 billion[iii]. Despite the fact that revenue collection picks in the second half of every financial year, it performance is likely to be affected adversely owing to persistent drought, and external factors may dampen economic activity.
It is important that the National Treasury ensure that information of how supplementary budgets will be financed is provided to facilitate interrogation and analysis of whether targets for fiscal deficits are realistic or not and implication thereof.
- Legal breaches and fiscal implication of introduction of new expenditure lines
According to the President’s Executive Order No.1[iv] dated January 2023, it was expected that the new administration will reorganize the government according to their manifesto. This re-organization is evident in the first Supplementary Estimates which capture introduction of 13 new MDAs[1] (two dropped/merged from the previous financial year-State Department of Broadcasting and Telecommunication and Witness Protection Agency). I note that this is not only against section 40(8) of the Regulations to the PFM Act, 2012 but that it will lead to cost escalation in the running of the national government. Furthermore, new programmes introduced in the course of the financial year (in-year) undermine the prudence principle of the Medium Term Expenditure Framework.
- Budget revisions undermine administration’s adherence to fiscal responsibility principles
Often, supplementary budget negate fiscal responsibility principles observed in budgeting. If the proposed revisions as per the first Supplementary budget Estimates 2023/24 are upheld, the share of development expenditure to total budget will reduce to 28% below the recommended threshold of at least 30%. Therefore, the National Assembly should note that even with improved absorption rates for development budget, substantial reduction will breach government’s fiscal responsibility requirements.
- Financial information on proposed budget revision is not always accompanied by comprehensive non-financial information
Overall review of the first supplementary budget reveal improvement in the level of information provided. However it is important to note that most of this information is financial but not always accompanied by comprehensive non-financial information (for example on targets, indicators, etc). Yes, there is improvement on, for instance, revised targets where budgetary allocations have been proposed for adjustment. Justification for suggested adjustments is to a large extent missing, and where it is provided, it is vague; yet such information is not only critical in providing valuable insights and enabling understanding of financial information but also aids in enhancing overall decision making process. For example, the justification provided for revisions in the health ministry’s approved estimates is “…rationalization of the budget and transfer of functions”. It is therefore not clear why the roles are being transferred; and in some cases the roles being transferred have not been indicated in the supplementary budget.
Conclusion
The intention of this blog piece is to highlight some insights and issues analyzed from my review of the first Supplementary Budget for FY 2022/24 towards contributing to elevated public dialogue and oversight on the use of public funds. It is clear and as provided for in the law that supplementary budgets are necessary depending on the socio-economic situation of a country in particular points in time. However supplementary budgets can be abused and may be a conduit for financial mischief. This is the reason why the law makes provision for certain checks and balances in budgetary processes.
I acknowledge the National Assembly’s efforts in ensuring public participation in supplementary budgets for the first time and call for civil society vigilance on this to ensure that this practice is maintained going forward.
The intentions of the supplementary budgets are clear enough but what is not as clear, is whether financing to meet the proposed adjustments will be realized to ensure that the government is on track in realizing its fiscal consolidation agenda. It is also important to note certain political decisions, of reorganizing government have legal and fiscal implications. Furthermore limited explanation and justification for budget adjustments limits overall transparency and accountability of supplementary budgets.
I therefore recommend that the National Treasury should, going forward, ensure provision of comprehensive information on estimates of supplementary, financial and non-financial budgets to ensure facilitation of meaningful public engagements and oversight on budgets and expenditures. At the same time, there is need to be aware that historical trends of supplementary budgets in Kenya signal that budget revision is increasingly becoming a habit which is symptomatic of poor planning. If these good public finance management practices are observed, they would lead to improved fiscal discipline and ultimately to better service delivery to citizens.
[1]They include: 1176 State Department for Miro, Small and Medium Enterprises Development; 1194 Ministry of Petroleum and Mining; 1281 National Intelligence Service; 1332 State Department for Forestry; 1012 Office of the Deputy President; 1013 Office of the Prime Cabinet Secretary; 1024 State Department for immigration and Citizen Services; 1025 National Police Services; 1026 State Department for Internal Security and National Administration; 1053 State Department for Foreign Affairs; 1054 State Department for Diaspora Affairs; 1083 State Department for Public Health and Professional Standards and 1104 State Department for Irrigation
[i]National Assembly Hansard Report, Tuesday 14th February 2023 via http://www.parliament.go.ke/sites/default/files/2023-02/Hansard%20Report%20-%20Tuesday%2C%2014th%20February%202023%20%28P%29.pdf
[ii] Office of Controller of Budget Implementation and Review Reports for 2022/21
[iii]National Treasury Budget Policy Statement 2023 via
[iv] Republic Of Kenya Organization Of The Government Of The Republic Of Kenya January, 2023 Issued By The Executive Office Of The President via https://mfa.go.ke/wp-content/uploads/2023/01/Executive-Order-No.-1-of-2023-Organization-of-the-Government-of-Kenya.pdf
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