By James Anyanzwa and Jackson Okoth.
Deputy Prime Minister and minister for Finance Mr Uhuru Muigai Kenyatta is today expected to read the 2010/11 Budget with a fresh focus on increased spending to strengthen the nascent economic recovery.
The minister will be seeking to fund close to a trillion shillings budget in the next fiscal year, the biggest ever spending in the country's history. However, Uhuru will use a significant amount of tax revenues to pay salaries, perks and running the Government.
The 2010/11 Budget is also expected to feature proposals to harmonise the tax regimes of the five East African countries (EAC), ahead of the common market protocol coming into effect next month.
This is the third set of Government financial statements to be released under the grand coalition government, which was formed as a temporary arrangement to restore peace and national cohesion in the country after a disputed presidential election.
According to the 2010/11 Treasury estimates tabled before Parliament yesterday, the 2010/11 Budget swelled by 15 per cent to Sh996.8 billion from the current year's Sh865.6 billion. This consists of Sh675.6 billion recurrent spending and Sh321.2 billion development expenditure.
Recurrent budget, as a proportion of total budget, however, declined from 70.1 per cent to 68 per cent, while development expenditure rose from Sh258.9 billion in the current financial year to Sh321.2 billion.
High spenders
The lion's share of development spending went to the roads sector, which takes Sh78.7 billion, compared to Sh50.4 billion in the current financial year. It is followed by energy sector (Sh34.1 billion), Ministry of Public Health and Sanitation (Sh13 billion), Ministry of Agriculture (Sh10.8 billion), Ministry of Education (Sh9.5 billion) and Ministry of Higher Education (Sh7.8 billion).
Others include ministry of tourism (Sh1.2 billion), Medical Services (Sh7 billion), Internal Security (Sh4 billion) and Ministry of Justice National Cohesion and Constitutional Affairs (Sh813 million).
Recurrent expenditure jumped 11 per cent to Sh675.6 billion, up from the current fiscal year's Sh606.7 billion with the ministry of Education taking the biggest share of Sh131.56 billion, mainly due to free primary and secondary education and the need to recruit more teaching staff.
Economic growth
Ministry of Higher Education was allocated Sh41.4 billion for recurrent expenditure.
Treasury has been allocated Sh31.2 billion mainly to cater for recruitment of accountants, increase in cost of goods and services, provision for pending bills owed to Telkom Kenya and budget reserves.
The current spending is expected to lift the economic growth to a modest 4-4.5 per cent compared with 2007's 7.1 per cent, the highest in more than three decades.
Mr Uhuru is expected to further encourage increased household and business spending and tighten his expenditure rationalisation programme, which saw the economy grow marginally to 2.6 per cent from the previous years 1.7 per cent.
With expenditure rising faster than revenue, Uhuru will have to pay for this through taxes, grants and heavier borrowing.
While Treasury borrowed heavily in the domestic money market to finance the 2009/10 Budget deficit, its appetite in the market is expected to fall to allow private sector access cheap credit and participate in economic activities.
Source: The Standard | Online Edition
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