What the 1.46-trillion-shilling budget means to you
The Sunday Nation
Nairobi,
24 June 2012
Several readers have asked me to comment on the budget proposed by the Independent Electoral & Boundaries Commission (IEBC). They want to know whether I think the Sh34 billion is justified. Well, I wrote to IEBC and requested for a copy of the budget, but five weeks down the road, they still haven’t replied. Therefore, I cannot make any comment about it.
Meanwhile, Finance Minister Njeru Githae read his budget statement in which he proposed to spend Sh1.46 trillion shillings in the coming financial year (July 2012 to June 2013). First let me put that number into perspective: it is 1,460,000,000,000. A Kenyan trillion has 12 zeroes.
A common thread running through all the press reports was that this is
the largest budget in
It is a common phenomenon that the budget of any organisation will increase in every succeeding year. If that doesn’t happen, then something is terribly wrong! I can predict with certainty, that next year’s budget will be greater than Sh1.46 trillion.
Thus mathematically, we find that if a number A is greater than B and B is greater than C; then it follows that A is greater than both B and C. In other words, A is the largest of the three. Obviously!
Now let me emphasise that the Sh1.46 trillion is the amount of money that the government ESTIMATES will be required to finance all its activities in 2012/13. The problem with budgets in non-business organisations is that the accountable officers assume that this is the amount they MUST spend.
Indeed some non-business organisations reprimand officers who do spend every cent that had been put in the budget. Thus you might find some ridiculous situations where officers refuse to accept discounts extended to them by suppliers!
But I digress; this is not a finance management column…
I must commend The Treasury for producing an easy to read break-down of how the money will be spent – complete with a pictorial illustration. It was published in the national newspapers and can also be downloaded from the Ministry’s website.
From the breakdown, the single largest allocation is the Sh346bn (23.7 per cent of the total budget) going to something called “Consolidated Fund Services”. This is the money required to pay mainly the interest on government borrowings. Thus this will not be represented by any tangible items!
The second largest allocation is for physical infrastructure with Sh267bn (18 per cent) followed by education with Sh233bn (16 per cent). All other sectors have less than 10 percent each.
Now spending Sh1.46 trillion is a very easy task, especially for some one who doesn’t have to earn the money; the big problem is in raising the cash. I would have expected the minister to state clearly how all this money will be raised. That is, how much will come from taxes, how much from loans and how much from grants.
I have looked for this information in both the summarised breakdown and the budget speech but I can’t find it. If it’s there, it is buried under technical jargon and parliamentary gobbledegook. Perhaps some one at The Treasury will read this column and shed some light.
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