MPs endorse over Sh37billion budget cuts to address shortfall

Members of the National Assembly watch the proceedings on tv outside the chamber during the Special sitting to discuss the Financial bill on VAT on the petroleum products.[Boniface Okendo,Standard]

The National Assembly yesterday approved budget cuts worth Sh37.6 billion from the Executive, Parliament and the counties to bridge the current deficit.

With a shortfall of more than Sh500 billion, the Government expects to further bridge the deficit through external borrowing to finance its Sh3 trillion budget.

The MPs adopted the report of the Budget and Appropriations Committee chaired by Kikuyu MP Kimani Ichung’wa, which also retained the National Government Constituencies Development Fund (NG-CDF) at Sh 33.3 billion and the Affirmative Action Fund at Sh2.1 billion.

Earlier, the legislators had planned to reject sections of the Supplementary Appropriation Bill based on proposals by the National Treasury to take away Sh6 billion from NG-CDF and Sh2 billion from the Affirmative Action Fund.

The MPs also lost Sh3.8 billion from the Equalisation Fund while the Parliamentary Service Commission (PSC) budget was reduced by Sh600 million.

Lawmakers’ interests

To ensure that the lawmakers’ interests were catered for after a charged meeting of the Jubilee Party Parliamentary Group (PG) at State House and the Opposition Orange Democratic Movement (ODM) party’s PG meeting at Orange House, Treasury assured Parliament that it would only lose funds for operations and maintenance.

“The Government lost the standby credit when the International Monetary Fund (IMF) stood down its credit, although the Government is still in talks with them,” said Mr Ichung’wa when he moved the motion to adopt the report.

“Our foreign reserve depends on diaspora remittance, which requires a solid insurance policy. With a deficit of Sh562 billion, we now bank on domestic and foreign borrowing as well as local revenue,” he said.

The MP said the budget cuts were arrived at after intense negotiations with Treasury, PSC and the Judicial Service Commission that went into the night on Wednesday.

“We had to reduce expenses by 7.5 per cent to meet the fiscal deficit. We must exercise fiscal discipline in the principle of give and take. Then development partners will have confidence in the Government,” he said.

The biggest losers in the new austerity measures are the Last Mile Connectivity electricity programme (Sh1.5 billion), the laptops for schools project (Sh5.5 billion), roads (Sh8.7 billion), Equalisation Fund (Sh3.8 billion) Ministry of Education infrastructure project (Sh600 million) and Konza City (Sh400 million).

The Ministry of Energy will lose Sh2.6 billion, the Petroleum ministry Sh1.5 billion, PSC Sh1.2 billion, the National Assembly Sh1 billion, Teachers Service Commission Sh67 million and Sports ministry Sh29 million.

Other losers were the Department of Planning (Sh286 million), Health ministry (Sh22 million) and Independent Policing Oversight Authority  (Sh20 million).

The Department for Immigration will lose Sh91 million, Devolution ministry Sh2.6 million, Department of Arid and Semi-Arid  Lands Sh47 million, Defence ministry Sh42 million and Foreign Affairs ministry Sh179 million.

Others were the Department of Vocational and Technical Training (Sh1.3 billion), Basic Education (Sh1 billion), University Education (Sh1 billion) and National Treasury (Sh6.5 billion).

Among the austerity measures adopted were reduction of capital expenditure by Sh28.5 billion. The Presidency’s budget for recurrent expenditure and development was reduced by Sh323 million while the Interior ministry lost Sh377 million.

“We have proposed 16 per cent budget cuts across the board. MPs’ house allowance, personal emolument, salaries and wages were not touched. We want real austerity measures cutting across all departments of Government,” said Ichung’wa.

He said some items in domestic and foreign travel budgets had been cut while training and seminars for all ministries were reduced.

Leader of Majority Aden Duale (Garissa Township) seconded the austerity proposals.

“Let us engage from the point of facts and figures. Leaders should show goodwill. In law, the House balances the budget,” said Mr Duale.

Leader of Minority John Mbadi (South Suba) admitted that the country was facing tough financial choices.

“We must maintain financial integrity as a country. We projected the revenue at Sh1.9 trillion. The debt repayment stands at Sh870 billion,” he said, adding that there was no money left in the country’s budget for development.

“Salaries stand at 650 billion; add that to debt repayment, and it goes to Sh1.5 trillion as Sh314 billion goes to counties. That makes it Sh1.8 trillion, leaving us with less than Sh100 million to spend on development,” he said.

Opposed measures

A number of MPs, including Robert Mbui (Kathiani), Omboko Milemba (Emuhuya), Ali Wario (Garsen), Alpha Miruka (Bomachoge Chache), Gideon Mulyungi (Mwingi central), Geoffrey Osotsi (nominated) and Owen Baya (Kilifi North) opposed the austerity measures.

They took issue with the reduction of budgets for education, roads and energy.

Mr Baya censured Cabinet secretaries, whom he accused of lacking innovation to help Government raise revenue instead of relying on budget cuts and tax increments.

“They can offload assets and scale down their budgets. There are better austerity measures to ensure we cut costs,” he said.

Mr Osotsi argued that some budgets could be harmonised to seal the deficit.

“The budget for technical and vocational education was initially Sh2.3 billion, now it is Sh7.4 billion. Why the huge variation?”

Mr Mbui said Parliament had a chance to correct the mistake of an ambitious budget with a lot of duplication.