How election year billions will be used

Ukur Yatani, the Cabinet Secretary for National Treasury. [Wilberforce Okwiri, Standard]

President Uhuru Kenyatta's government will spend an additional Sh126.3 billion to prepare for elections, fight drought and procure more Covid-19 vaccines by end of the current financial year.

In its first mini budget for the Financial Year ending June, the National Treasury has indicated that it will also spend more money to bail out ailing parastatals, including cash-strapped Kenya Airways, Kenya Power and public universities.

“It (mini budget) seeks to address drought-related interventions, provisions for security-related expenditure, Covid-19 related expenditure, pending bills, salary shortfall, 2022 General Election preparedness, Competency-Based Curriculum (CBC) infrastructure,” said Ukur Yatani, the Cabinet Secretary for National Treasury in the report tabled in the National Assembly.

The allocations will push the total budget for the current financial year ending on June 30 to Sh3.38 trillion, with much of the money expected to come from foreign creditors. 

With five months to the August 9 elections, Yatani re-allocated a lot of the funds for elections including an additional Sh8.8 billion for the Independent Electoral and Boundaries Commission (IEBC). This pushes the total allocation to IEBC for the Financial Year 2021-22 to Sh23.2 billion.

The money will be used for management of the electoral process, including buying additional kits to be used in the additional polling stations, printing of ballot papers, transport of voting materials and payment of staff.

Some money has also been set aside for enhanced security during the elections, with security agencies - including the Ministry of Defence, Ministry of Interior and National Intelligence Service - getting Sh15.1 billion, Sh1.16 billion and Sh2.2 billion respectively.

And with the country grappling with a biting drought, where close to two million Kenyans are at risk of dying of hunger, the government has allocated more funds to the State Department of Crop (Sh5.3 billion) and Ministry of Water (Sh4.1 billion).

The Covid-19 pandemic, which has left behind an economic and health crisis, continues to absorb much of the government cash with the Ministry of Health getting Sh14.9 billion to procure vaccines against Coronavirus. 

By end of yesterday, 12.45 million vaccines had been administered. 

However, the biggest gainers are the troubled State corporations, with Kenya Airways getting a bail-out amounting to Sh26.6 billion as part of the restructuring programme spearheaded by the International Monetary Fund (IMF).

This is one of the many bail-outs that the cash-strapped national carrier has been getting from taxpayers.

The three-year IMF programme is aimed at improving the country’s public finances by increasing tax revenues and reducing spending, especially non-essential spending. This will narrow of the gap between the country’s tax revenues and its spending or fiscal deficit.

Top public universities, including the University of Nairobi, Kenyatta and Moi universities will also get an additional Sh8.5 billion to streamline their operations.

Another troubled State corporation that will get bailed out by taxpayers is Kenya Power, which will get Sh3.3 billion which will be used for restructuring.

In July last year, the Treasury announced that it had completed a financial health check on 18 parastatals that unearthed a cumulative five-year financial shortfall of Sh70 billion, which means that a good number of the State-owned enterprises (SOEs) are in the red, with liabilities exceeding their assets.

Yatani said the government would soon be undertaking a rigorous restructuring of the cash-strapped corporations.

Most of the SOEs will be expected to stand on their own by diversifying their revenue sources, cleaning up their payrolls, selling non-profitable assets and ventures and leveraging on ICT.

State corporations might have to tighten their belts further after it emerged that the National Treasury was preparing a mini budget to buy more Covid-19 vaccines, mitigate drought and bail out ailing parastatals.

The National Treasury will borrow more and also expects to collect more in taxes following a good run by the Kenya Revenue Authority, which has been exceeding its target. The money that the Treasury is expected to borrow will increase from Sh930.4 billion to Sh1 trillion.

In the current financial year ending June, the Treasury is expected to issue a fifth Eurobond estimated at Sh250 billion.

There was additional cash for infrastructure as Uhuru seeks to complete his flagship projects including those under the Big Four Agenda