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"id": 224813,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/224813/?format=api",
"text_counter": 187,
"type": "speech",
"speaker_name": "Mr. Kimunya",
"speaker_title": "The Minister for Finance",
"speaker": {
"id": 174,
"legal_name": "Amos Muhinga Kimunya",
"slug": "amos-kimunya"
},
"content": " Yes, the President has given his consent to this Motion. The current Budget that is financing the Public Service was approved by this House on 22nd November, 2006. In implementing the Budget, I have adhered to the broad fiscal framework that was tabled before this House in June 2006. A review of the Budget implementation to the end of February, 2007, has indicated that some assumptions that underpinned the Budget formulation including revenue collection have since changed. In addition, we have received several requests by Ministries for both additional funding as well as re-allocations. Mr. Deputy Speaker, Sir, the following are some of the key factors that have notably varied from the original projections. The first one is on revenue collection which is below the projected level for the end of February, 2007. As we project to the end of June, we anticipate a reduction in collection of revenue of Kshs5.9 billion. Mr. Deputy Speaker, Sir, the second critical and major factor is that we have an additional expenditure requirement of Kshs11.6 billion for servicing the obligations of the Consolidated Fund Services (CFS). The third factor is that we have requests, by Ministries, for additional funds amounting to Kshs33 billion. I will try to give highlights on each of these issues. On revenue projection, the collections have not performed in line with our earlier projection. As I said, analysis indicate that there will be a shortfall of Kshs5.9 billion by 30th June, 2007. We have discussed this matter with revenue collection authorities and also analyzed where the problems are. We know that appropriate administrative measures are being taken to ensure that a further decline will not occur in the remaining period until June, 2007. Indeed, we may well have some recoveries, especially in the last one month and the performance this month, but to be on the safe side, we would want to provide for food. When the money becomes available, we will apply it towards reducing any borrowing that we might have to do. Mr. Deputy Speaker, Sir, on the CFS, the expenditure trend that this non-discretionary expenditure budgeted for under the CFS indicates that there will be an additional requirement of Kshs11.6 billion. Included in this Kshs11.6 is Kshs4.5 billion that relates to rolling over part of the domestic debt and which does not entail any actual movement of funds. The actual additional requirement of funds is, therefore, Kshs7.1 billion, which is made up of two main items; that is, interest on both internal and external debt. We may have to pay an extra Kshs4.6 billion over and above our projection. Mr. Deputy Speaker, Sir, in terms of ordinary pensions, hon. Members may recall that we raised the threshold; the amount payable per month from Kshs500 to Kshs2,000 and this has resulted in an extra expenditure of Kshs2.7 billion. As hon. Members may be aware, the CFS does not require approval of this House and we are basically reporting for purposes of hon. Members to note the extra increases and the impact it may have on the rest of the Budget. With regard to the requirements for additional funds by various Ministries and Departments, we have received requests for additional funding of Kshs33 billion. All these requests have come up due to extra activities being undertaken by the Ministries and natural calamities that befell this country. We experienced drought and floods in this country. This resulted into extra expenditure that was not anticipated. We have also had issues to do with honouring some agreements that were entered into earlier on and fast-tracking others. A good example of this is the case of teachers' pay rise. We have also had issues to do with raising our Strategic Grain Reserves so that, at least, we can lock in the good harvest farmers have been making and avoid food shortages in the future. There is a host of so many other requests that I will be mentioning in a minute's time. Mr. Deputy Speaker, Sir, having looked at the figure of Kshs33 billion, adding to it the extra Consolidated Fund Services request and a shortfall within the revenue, we have been left with April 24, 2007 PARLIAMENTARY DEBATES 845 no option, but to re-look at the request of the Ministries. We have, therefore, adjusted that figure downwards from Kshs33 billion to Kshs19.5 billion. It is important to note that these three factors are really the basis for this financial year's Revised Estimates. In preparing these Estimates, we are very conscious of the need to maintain our fiscal stability that is critical to economic growth. Despite the influence of these factors, our overall domestic borrowing will remain at the projected level as shown in this year's Budget framework. I would also like to add at this point that in the normalisation of our relations with the International Monetary Fund (IMF), the World Bank and other development partners, we also expect that some of the funds that had been frozen will start flowing, which will also help reduce the pressure on internal borrowing leaving that money for the private sector. Mr. Deputy Speaker, Sir, after considering the Budget out-turn for the first eight months of this financial year and the trend of the various expenditures, adjustments and reallocations have been made to priority programmes. I would like to highlight here where we are going to make some of the allocations that are recommended for approval by this House. As I said earlier, the first priority goes, obviously, to the additional expenditure on Consolidated Fund Services, where we do not have a choice expect to note. We are proposing for appropriation, by this House, an extra expenditure in respect of teachers' wage adjustment amounting to Kshs2.5 billion. Hon. Members are aware that we promised teachers that should the economy improve, the amount of money that was being paid in instalments would be accelerated so that they also feel the benefits resulting from an economy which has improved. We have kindly agreed, and we have negotiated, that we could pay one half of the instalment that was falling due in the next financial year in addition to all the instalments for this year. Hopefully, we should be able to clear everything within the next financial year, that is, between July and December, so that teachers can now start feeling that they are part of this growing economy. Mr. Deputy Speaker, Sir, like I said earlier, we have witnessed, because of the reforms that are taking place in agriculture, that our farmers have taken advantage of all the incentives being given to them, for example, the good prices that are being guaranteed by the Government. As a result of that, they have produced a lot of grain, especially the people living within the grain baskets of this country. We have undertaken to increase the Strategic Grain Reserve by an extra one million bags of maize, which should now see the country survive through the worst of situations as well as giving our farmers a guaranteed purchase on the extra work that they have put in terms of producing food for the nation. In this financial year, we expect to finance a-half of that, which is Kshs900 million. The rest of the money will be provided within the next budget. With regard to disaster relief, based on the problems that we experienced as a result of drought and floods, we were forced to incur an extra Kshs900 million. There were also problems caused by the Rift Valley Fever, which we had to mitigate against. However, we are happy to note that the problems have now been contained. On roads maintenance, we have a net extra addition of Kshs2.5 billion, again, arising out of similar situations that I stated earlier on. For instance, as a result of floods, bridges on our roads collapsed and hence the need to increase funding for construction of roads and their maintenance. Rural electrification in this country has been very successful in terms of implementation. We are now allocating some extra funding so that we can reach many more Kenyans in our constituencies. That way, we shall give them light and get them out of darkness. We hope to reach many more schools in the rural areas in order to give our children better lights so that they can study day and night as we hope to better their lives. That is in addition to another Kshs1.3 billion that the Government has undertaken to pay to the Kenya Power and Lighting Company (KPLC) on behalf of Kenyan consumers. This is the shortfall between the amount they are being charged by KenGen at Kshs2.36 per kilowatt/hour and what they are capable of absorbing without passing that extra cost to the consumer at Kshs1.76 per kilowatt/hour. The difference of 60 cents is being funded by the Government on behalf of all the consumers in this country. That will cost an extra Kshs1.3 billion while letting the two companies 846 PARLIAMENTARY DEBATES April 24, 2007 operate in accordance with the agreement that they signed. Mr. Deputy Speaker, Sir, I will, therefore, be seeking appropriation of an extra Kshs1.7 billion towards the Rural Electrification Project and KenGen/KPLC subsidy to Kenyan consumers. Mr. Deputy Speaker, Sir, we have all seen the progress made by the Ministry of Water and Irrigation. The Ministry has provided Kenyans with quality drinking water. There are now many families accessing quality drinking water, especially in arid and semi-arid areas. Piping has been done in areas where people have never had a chance to taste it. The Ministry is seeking an extra Kshs800 million in these Supplementary Estimates. Mr. Deputy Speaker, Sir, the Prisons Department has not received as much funding as required. Consequently, we have had many accumulated bills. These are in terms of food and electricity bills. We have had embarrassing situations of power cuts in prisons because the KPLC has not been paid. We fear we could lack food in our prisons if we do not top up the amount available for the department. We are allocating an extra Kshs800 million towards Prisons Department, mainly for food and electricity bills. Mr. Deputy Speaker, Sir, we will also be seeking extra funding amounting to Kshs.700 million under the Ministry of Trade and Industry. This is money that was allocated to bailout Uchumi Supermarkets. This was a loan. We are all very happy that the only chain of markets that was initiated by the Government, with the efforts of Kenyans, we were able to save it from imminent collapse. It is now doing a wonderful job. It is turning around. We hope that we will recover this money when we eventually return it to its shareholders. The Government will then be paid back its money. In the meantime, we will be seeking for an appropriation of Kshs700 million. Mr. Deputy Speaker, Sir, under the Ministry of Transport, we are seeking an extra Kshs600 million. This relates to the continued support we had to give the Kenya Railways for the four months; between July to October, 2006, due to the delay in takeover by the concessionaire; Rift Valley Railways. They were still trying to work out the conditions that we had imposed on them and to fit within an acceptable agreement. We had expected them to take over from 1st, July, 2006. However, in the event that they delayed for four months, this cost was passed on to us in terms of subsidy and servicing of Kenya Railways Corporation. I hope that in the future, this will be a thing of the past."
}