Key highlights of the 2023 Budget Policy Statement report

  • 24 Mar 2023
  • 4 Mins Read
  • 〜 by Anne Ndungu

The Budget and Appropriations Committee is a standing committee at the National Assembly tasked with among other functions investigating and reporting on all matters related to the coordination, control, and monitoring of the national budget and evaluation of tax estimates, and economic and budgetary policies. In the performance of these functions, in line with Section 25(7) of the Public Finance Management Act, the Ndindi-Nyoro led committee released its report on the Budget Policy Statement, 2023.

Key highlights of the Report are as discussed below:

(a)  Changes in Ceilings for the Arms of Government

The Committee has proposed that the ceiling for the Executive for FY 2023/2024 be trimmed by KSh. 62.89 billion, fixing the same to KSh 2.189 trillion. For Parliament, the committee has proposed a ceiling at KSh 40.4 billion, while the Judiciary has been capped at KSh 22.99 billion. Notably, based on an evaluation report, the Committee has also proposed that the Medical Equipment Scheme be allocated an increased 4.5 billion.

(b)  Commission on Revenue Allocation’s (CRA) recommendations on Equitable Share Allocation retained

The proposal by CRA that the equitable share allocation for county governments be upped from KSh 370.0 billion as was in FY 2022/2023 to KSh 385.4 billion for the FY 2023/2024. The other highlight is that the allocation for the Equalization Fund has been retained at KSh. 7.87 billion for the FY 2023/2024.

(c)  Additional Allocations for Counties

The Committee has aligned itself with a proposal by the National Treasury to cap additional allocations at KSh 44.3 billion. The additional allocations are further enumerated as KSh 11.1 billion for conditional and unconditional grants from the national government share of revenue and KSh 33.2 billion from loans and grants to county governments.

Relevant to this, the Committee has also recommended that the National Treasury designs a framework for governing conditional grants to counties. It noted that the framework needs to come out clear on the roles of a body, if proposed, the criteria governing the grants and issues around contributions.

(d)  Proposed reprieve for Kenya Airways

The Committee has also proposed that the government considers reprieve for the national carrier. Additionally, the committee has proposed that the national government reviews the taxes levied on the aviation industry and look further into the taxation of spare parts for the aviation sector. The committee has proposed that this be done by April 2023 as a way of aligning it to the Finance Bill, 2023.

(e)  Proposal to establish an Engagement Framework for collaboration between national and county governments

The Committee noted that the two levels of government need to work collaboratively especially on devolved functions as a way of achieving the aspirations of the people. The National Treasury is to report to the National Assembly in this regard by 30th September 2023. It is important to note that this proposal comes in the backdrop of a proposed bill, The Public Finance Amendment (Transfer of Functions) Bill, 2023.

(f)   Proposed measures on education

The Committee has proposed that the State Department for Basic Education initiates and conducts a far-reaching review of the capitation policy at the basic education level, and submit a report to the National Assembly within six months.

The Committee has also tasked the Treasury & Ministry of Education to develop a framework for the administration of School Infrastructure Funds. The committee proposes that this fund takes the form of a conditional grant to CDF as a mechanism for supporting the development of school infrastructure at the constituency level.

As a response to the financing deficits and challenges in public institutions of higher learning, the Committee has proposed that the Ministry of Education brings to a halt the placement of government-sponsored students in private institutions of higher learning.

(g)  Optimisation of the e-citizen platform

The Committee, in line with the aim of the government of digitizing and digitalizing services, has proposed that the Ministry of Information, Communication and the Digital Economy, alongside other relevant stakeholders prioritize the optimization of the e-citizen platform. More importantly, the Committee has reiterated that the fees collected through this platform also needs to be relooked as a way of increasing revenue collection to support efficient service delivery.

(h)  Fast-tracking of the trade pacts between Kenya and the US

To foster trade and further strengthen the bilateral relations between Kenya and the US, the Committee proposed that the trade pacts between the two countries be hastened, finalised and executed. The rationale for this is to open the American market to Kenyan products and vice versa.

The National Treasury and the Ministry of Trade have then been tasked to fast-track the Strategic Trade and Investment Partnership Pact between the two nations and report to the National Assembly by June 30, 2024.

(i) Review of the Inua Jamii Cash Transfer Programme

The Committee has also tasked the State Department for Social Protection to review the Inua Jamii Cash Transfer Scheme, and make recommendations on the adequacy of the funds and mechanisms for continued registration. Once the same is done, a report should be tabled before the National Assembly by September 30, 2023.

(j) Merger of the National Fund for the Disabled in Kenya and the National Council of Persons with Disability

The Committee has noted with concern the issues affecting persons with disability and the infiltration of corruption in the issuance of tax exemptions here, which have deprived the country of revenue.

As a consequence, the Committee has proposed that the National Fund for the Disabled in Kenya be merged with the National Council of Persons with Disability. In this regard, they have recommended that the Attorney-General drafts a bill to actualize this.

(k)  Alternative power sources to the national grid

Owing to the ever-escalating electricity charges and in line with the principles of sustainable development, the Committee has proposed that the Geothermal Development Corporation takes proactive steps and prioritizes the connection of steam-generated electricity to a capacity of 206MW, be connected to the national grid by April 30, 2023.