Recently, the National Assembly called for memoranda on the Supplementary budget 2022/2023 tabled before the House for approval. This budget was much awaited as President Ruto has promised to cut down government expenditure by KShs. 300 billion and work towards fiscal consolidation.

Ideally, supplementary budgets are used by governments to cater for unforeseen expenditures that are not taken into account in the normal budget making process such as emergencies or new developments.  But this has not always been the case and supplementary budgets can be abused. One of the ways this has been done in the past is by not submitting these budgets in good time to allow Parliament enough time to study the adjustments.

Supplementary budgets can also be used to hide the real extent of government expenditure. The National Treasury sometimes does allocations in the supplementary budget that should be in the normal budget in a bid to conceal the fact that it will need to borrow more. The Treasury also does not have the mechanisms to determine whether the requests coming in for further allocations are genuine.

In an attempt to rein in this problem, the Budget Appropriations Committee in 2020 made a recommendation that no supplementary budget should be submitted to Parliament after the 30th of April of any financial year. This rule, however, continued to be overlooked until this year when it was observed.

According to information from the International Budget Partnerships Kenya, budgets should be queried according to the following criteria: Revenue, Expenditure, Deficit, Non-financial Information, Priorities, Budget Ceilings, Emerging Issues, Justification and Public Participation.

An analysis of this particular supplementary budget shows that there are no revenues which makes it difficult to identify how the Kenya Kwanza government is going to finance the budget.

Expenditure should be analysed for changes. One should be able to identify how expenditures are changing and where they are moving to. Who is gaining and who is losing. Some of the largest allocations in the current supplementary budget have gone to the Ministry of Petroleum and Mining, the State department for Crop Development and Agricultural Research and the National Police Service amongst others. The largest decreases have been in the State department for Agriculture, Ministry of Energy, Ministry of Health and Ministry of Water, Sanitation and Irrigation. KShs. 20 billion has been allocated to the Financial Inclusion Fund also known as Hustler Fund.

A deficit analysis shows how the expenditure is increasing and where revenue to fund that increase in expenditure is to be sourced from. If the deficit is widening it means that there are no revenues to fund the expenditure increase. In past supplementary budgets, there has always been an increase in the deficit just as in this current one.

Non-financial information refers to information in the budget that normally doesn’t change but should. This refers to the targets set by the government, their indicators and the baseline information. If the government is making changes in the budget, then the targets should also change. In this particular supplementary budget, there are no corresponding changes to the non-financial information which means that the government has made changes without recognising that without the corresponding revenue, the original targets cannot be met.

Priorities are usually indicated by movement of the money. Money in the budget moves to where government priorities lie.

Budget ceilings are formulated in the Budget Policy Statement and refer to the allocations made to the sector which should not be exceeded. It is therefore important to find out if the budgetary allocations are being adhered to.

Emerging Issues can affect a budget. A case in point is Covid-19 and the resultant measures which had a profound effect on the country. In the current budget, there has been a transition to a new government which created 13 new Ministries, Departments and Agencies which will lead to an increase in government expenditure.

Every budget should give a proper Justification for the course of action being taken. This is usually done through the narrative to allow for proper interrogation and transparency of the budget. Kenyan budgets tend to be weak on justifications and supplementary budgets tend not to have justifications for the movements noted therein. Technical and Vocational Education and Training activities have had their budgets cut while free secondary education allocations have increased. Higher Education has seen increased allocations. This paints an interesting scenario because one wonders what will happen to the young people who don’t make it to university and who intend to go to a vocational school.

Public Participation gives the public an opportunity to scrutinise and give their input. While the normal budget making process involves significant public participation, when it comes to supplementary budgets, there tends to be little to no involvement of the public. It is actually commendable that this budget has been subjected to public scrutiny.

The supplementary budget comes at a time when the Parliamentary Budget Office is cautioning the government about over optimistic revenue collection targets based on the overestimation of economic growth which will result in a wider fiscal deficit. This is despite Fitch’s outlook for 2023 which expects a global lag in growth in Developing Markets that will affect Emerging Markets. The exception will be in sub-Saharan Africa (SSA)  and Mainland China. In SSA, slightly faster growth is expected in South Africa and East Africa.