Kenya sets target of 35 pct of budgetary expenditure on development
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E-mail Xinhua, August 21, 2012
Kenya sets target of 35 pct of budgetary expenditure on development
NAIROBI, Aug. 21 (Xinhua) -- Kenya's Ministry of Finance has set a target of 35 percent of all government expenditure to be devoted to development in the 2012/2013 financial year.
Minister of Finance Robinson Githae told journalists in Nairobi on Tuesday that the expanding public wage sector bill is increasing the recurrent expenditure which is set to consume over 70 percent of the government resources in the 2012/2013 financial year.
"All the Kenya Revenues Authority projected collection of 11.3 billion U.S. dollars in the current financial year will be spent on recurrent expenditure and therefore treasury has decide to set a target of 35 to 40 percent of government expenditure in the next financial year will be reserved for development items," Githae said during the launch of the 2013/14-2015/16 Medium Term Expenditure Framework (MTEF).
The MTEF will be the second medium term plan for the country's economic blueprint Vision 2030 after the first one expires at the end of the current financial year.
He added that parliament could adjourn in December this year in preparation for the next general election.
"So the 2013 budget policy statement, Finance bill and the Value Added Tax bill must be approved by the current parliament before its term ends," he said.
Ministry of Finance Permanent Secretary Joseph Kinyua said that realization of national development hinges on prioritization and targeting of scarce resources on high impact priority areas identified in the medium term plans.
He added that the 24 billion dollars Lamu transport corridor (LAPSSET) project has been prioritized for the next medium term.
"The government has already availed 200 million dollars for the construction of the first three berths of the port," he said.
Kinyua said that a mixture of domestic and external shocks contributed to the country recording 3.5 percent economic growth in the first quarter of 2012 against 5.4 percent in same period last year.
"Due to slower than expected economic growth, Kenya recorded a revenue shortfall of 407 million dollars in the 2011/2012 financial year," he said.
The official noted that lack of proper planning led to under spending of 1.6 billion dollars in the last financial year. According to treasury, the government will be required to borrow 1. 27 billion dollars domestically in the current fiscal year.
The treasury official said that during the finalization of the 2012/2013 budget treasury received requests for additional funding in excess of 5.95 billion dollars or 30 percent of overall budget.
"This is an indication of poor planning and the use of five year development plans should help to reduce this," Kinyua said.
Parliamentary Budget Committee Chairperson Elias Mbau said that the expanding recurrent expenditures have meant that development projects are financed through domestic and foreign loans.
"The current unfavorable global economic output could make the foreign donors unable to extend credit to Kenya with negative consequences," he said.
The member of parliament of Maragua in central Kenya noted that high interest rates could make domestic borrowing too expensive.
Minister of Planning Wycliffe Oparanya said that at the current rate of urbanization, the number of people living in towns could increase from the estimated 30 percent of total population to 50 percent by the year 2030.
"This is will call for increased infrastructure spending in cities especially to ensure there is adequate provision social services," Oparanya said.
Ministry of Planning Permanent Secretary Dr Edward Sambili said that the next medium term plan will put greater emphasis on increasing the share of exports to the GDP.
"Manufactured exports could help Kenya create employment especially for the youth and also improve the country's balance of payment of position," Sambili said.
Ministry of Finance Economic Secretary Dr Geoffrey Mwau said that the current wage bill could derail over efforts to achieve the economic blue print, Vision 2030.
He added that the country's tax collection to the GDP ratio is one of the highest in the region. "Our tax to GDP ratio is approximately 24 percent so government ability to raise more funding is limited," he said. Enditem
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