How Well Did the National Government Implement its Budget in FY 2022/23?

Budget Implementation is the longest budget stage within Kenya’s budget cycle. It takes place between July 1 to June 30 of the following?year, the budget implementation stage entails active disbursement of revenue from the Consolidated Fund, spending of these funds and the delivery of services. Supplementary budgets are a common feature of this stage and as a good practice, should be a part of enhancing the implementation stage and not a disruption to it.?

At the implementation stage, the role of The Executive is to execute the budget, while the National Assembly is meant to provide?oversight. The executive provides regular updates on how the approved budget is being executed through quarterly budget and economic reports.??In addition to this, the Office of the Controller of?Budget (OCOB) publishes quarterly implementation reports at the national and county level.?

The National Quarterly Budget Implementation Reports produced by the OCOB provide an update on the status of budget implementation by the National?Government and should be published one month after the end?of each?quarter. This should include financial and non-financial information on overall budget performance, sectoral budget performance, and key issues and recommendations around budget implementation.??

What are some of the observable historical trends in Implementation Reports??

Some of the trends highlighted in previous national budget implementation reports include; low absorption rates especially in development expenditure, over 100% absorption rates in certain votes, supplementary budgets affect the overall budget implementation;?they increase underspending in instance where they are passed towards the end of the financial year. Cash flow affects the implementation of budgets and limited explanations and justifications for performance.?

In its latest budget implementation report, the Controller of Budget highlights that the national government spent 86.2% of its allocated expenditure in FY 2022/23. This is an improvement from 83% in FY 2021/22.? National Government gross expenditure in FY 2022/23 amounted to Kshs.3.18 trillion, comprising MDAs’ development expenditure at Kshs.473.55 billion (absorption rate of 81.0 per cent), recurrent MDAs’ expenditure at Kshs.1.4 trillion (absorption rate of 92.8 per cent) and Consolidated Fund Services at Kshs.1.31 trillion (82.7 per cent).?

How did sectors implement their budgets in FY 2022/23??

In the FY 2022/23, the social protection sector was allocated 2.3% of the revised gross national government budget, which amounted to Kshs. 83.6 billion. This comprised of development and recurrent expenditure of Kshs. 33.0 billion and Kshs. 50.6 billion respectively. Of the total allocation, Kshs. 74 billion was actually spent, comprising of Kshs. 25.6 billion and Kshs. 48.7 billion in development and recurrent expenditure respectively. Overall, this reflected an absorption rate of 88.9 percent.??

In the FY 2022/23 the Agriculture, Rural and Urban Development (ARUD) sector was allocated Kshs. 69 billion in the original approved budget which was later revised upwards by 37 percent to Kshs. 94.2 billion. The overall budget absorption for the sector was 81 percent and this means the sector was not able to utilize 19 percent of the budget allocated in the Supplementary Budget II FY 2022/23.?

The latest ARUD sector reports show that the implementation of some projects have been suspended as result of climate change, for instance, due to the rising water levels, the works on Fish Landing Sites in Nyandhiwa, wichlum, Lwanda Otieno, Mulukhoba, Ogal were suspended. This directly delays the completion of the capital projects.?

In FY 2022/23 the Health sector received 3.2% of the revised gross national budget. This was a total of Kshs 116.4 billion where Kshs 44.32 billion (38.1%) was for development and Kshs 72.07 billion (61.9%) was for recurrent expenditure.?A physical count of the sub-programmes?shows that only 15 out of the 34 sub programmes?achieved an?absorption rate of above 90%. Further, out of the 15 sub-programmes, only five achieved a 100% absorption?rate.?A physical count of the sub-programmes?shows that only 15 out of the 34 sub programmes?achieved an?absorption rate of above 90%. Further, out of the 15 sub-programmes, only five achieved a 100% absorption?rate.??

Finally, the national implementation report shows that the stock of public debt grew by 18.8% from?Kshs?8.63 trillion in FY?2021/22 to Kshs?10.25 trillion in FY 2022/23. According to the report this growth is aattributed to new loans?and a weakening Kenyan?shilling against major?world currencies. Notably, the report also shows a 611% increase in guaranteed debt between the original approved estimates and the Supplementary II estimates, equivalent to Kshs. 13.8 billion. The report also shows that total expenditure on guaranteed loans in the FY 2022/23 amounted to Kshs.12.3 billion consisting of payments for Kenya Airways guaranteed loan, represent an absorption rate of 76%.?