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"id": 298067,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/298067/?format=api",
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"type": "speech",
"speaker_name": "Mr. Githae",
"speaker_title": "The Minister for Finance",
"speaker": {
"id": 159,
"legal_name": "Robinson Njeru Githae",
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"content": " Mr. Deputy Speaker, Sir, as I said, I would like, from the outset, to give my appreciation to the Members of this august House for the support and cooperation that they have given me during my time at the Treasury. Through their cooperation we have been able to achieve quite a number of things. We have rectified some of the things that were not being done right and for that I will be forever grateful to the Members of this House. The Budget for the 2012/2013 Financial Year that I presented to this House early this month, in June, was formulated within a tight fiscal framework and against a background of several challenges. As you are aware, the world economy is going through a period of slow growth and increased uncertainty. Kenya’s growth has slowed but remains favourable and is expected to pick up gradually over the medium-term. While the fiscal and monetary policies remain supportive of growth, current projected growth rates are not fast enough to support the employment gains and poverty reduction that the country requires. The 2012/2013 Medium-Term Expenditure Framework budget was, therefore, prepared against a background of challenging external and domestic environment which puts significant constraints on the resource envelop. Hon. Members will recall that the Treasury submitted to this House the Budget for the 2012/2013 Financial Year on 26th April, 2012. We were able, for the first time, since the Constitution came into effect to meet that deadline. Last year, we were not able but this year we were able to meet that deadline on the fiscal policy paper. The only hitch was on the Appropriation Bill and once I heard the concern of hon. Members, we moved at a very fast speed and, therefore, today we have the Appropriation Bill. In financing the Estimates, we were guided by the available resources and the need to provide for the national priorities which include food security, infrastructure, security operations, the forthcoming general elections and the implementation of the Constitution. We also considered key priority issues and recommendations arising from the countrywide consultations held in the 47 counties last year. After the submission of the Estimates, the Budget Committee and other Departmental Committees commenced on the interrogation of individual Ministries, departments and agencies budgets during the month of May, 2012. Arising from the interrogations, Parliament came up with a report containing a number of recommendations which were adopted on 7th June, 2012. I am happy to report to this House that the recommendations of Parliament have been taken into account while preparing the Appropriation Bill and have been fully implemented taking into account that they were not fully financed. When we looked at the proposed savings and allocations, we found that they were not matching. There was a difference of about Kshs3 billion. So, taking that into account and rationalizing the requirement to ensure that we operate within a sound fiscal framework, I am happy to report that we have, to a large extent, implemented the recommendations of the Budget Committee. The Budget which I present to this House has, therefore, been adjusted to reflect the recommendations of Parliament and I think this is what our Chief Whip was referring to and I will be coming to that. Taking this into account, I request hon. Members to approve a total funding amounting to Kshs1.56 trillion comprising of the following:- (a) Ministerial recurrent expenditure amounting to Kshs658.4 billion including those expenditures financed through Appropriations-in-Aid. (b) Development expenditures amounting to Kshs450.6 billion. (c) Consolidated Funds Services amounting to Kshs346 billion including domestic and external debt redemption amounting to Kshs171.6 billion and Kshs26.2 billion respectively. (d) Provision for Civil Contingency Fund amounting to Kshs5 billion. Mr. Deputy Speaker, Sir, we have, therefore, to a large extent implemented – I want this to be very clear – the recommendations of the Budget Committee except in these areas which I will refer to. The Budget Committee had recommended that there be a 30 per cent reduction on domestic travel, subsistence, and other transportation costs across Ministries, departments and agencies. We have implemented this recommendation of the Budget Committee with the exception of security-related Ministries, basically Ministry of State for Provincial Administration and Internal Security, Ministry of State for Defence, the National Security Intelligence Service (NSIS) and the Prisons Service in the Office of the Vice-President and Ministry of Home Affairs – not the whole Ministry. This was because it was realized that a reduction of even a shilling would affect the ferrying of prisoners from remand prisons to the courts. We have also exempted Parliament because we realized that if this is done, the mileage of hon. Members would be affected, yet the core business of Members of Parliament is to service their constituencies and they need to move to their constituencies. So, that has been fully implemented except for those four areas I have mentioned. The other recommendation was 50 per cent reduction of the item on foreign travel and subsistence and other transportation costs across all the departments. We have instructed all Ministries to curtail all foreign travel, reduce the size of delegations and type of air tickets. This measure has been implemented with the exception of only three Ministries; that is, the Ministry of Foreign Affairs, The Ministry of East African Community and the Treasury. The Ministry of Foreign Affairs is exempted because their core function is actually to travel. They need to travel to meet their counterparts elsewhere. It is the same case for the Ministry of East African Community, whose officers need to travel to Arusha, Kampala, Rwanda, and Burundi. In the case of Treasury, it is because of the negotiations that always take place when we are looking for money from donors. With the exception of those three Ministries – I hope the Chief Whip is here and is listening – the recommendations have been fully implemented. Mr. Deputy Speaker, Sir, the other proposal was on a 20 per cent reduction in fuel, oil, lubricants and routine maintenance of vehicles and other transport equipment. This, again, has been fully implemented, with the exception of all the Ministries dealing with security, that is the Ministry of State for Provincial Administration and Internal Security, the Ministry of State for Defence, the NSIS and the Prisons Services. Again, it is for the reasons that I have explained. Even for the police, the amount of fuel that a vehicle is allocated, that is 10 litres per day is actually not enough. Therefore, reducing the amount by even a single cent will affect their operations. It is the same case with the CID. Sometimes they cannot use their vehicles because they have no money for fuel. So, I am happy to report that with the exception of those security-related Ministries, the recommendation has been fully implemented. The other proposal was a four per cent reduction on current grants to Government agencies. I am happy to report that we have implemented this with the exception of Local Authorities Transfer Fund (LATF). This is because as per the LATF Act, 1992, the fund is pegged on five per cent of the national income from tax collection in a year. So, any reduction would have affected this, thus changing the law, yet we have no intention of doing so. The LATF is going to exist and it has been budgeted for even in the next financial year. The basics, perhaps, may change when we go to the county governments. That has been fully implemented with the exception of the LATF. Mr. Deputy Speaker, Sir, the other proposals was a 20 per cent reduction of other operating expenses. Again, this has been implemented with the exception of the security- related Ministries, that is, the Ministry of State for Provincial Administration and Internal Security, the Ministry of State for Defence, the National Security Intelligence Service (NSIS) and the Prisons Service in the Office of the Vice-President and Ministry of Home Affairs. This is, again, for the same reasons that I stated earlier on. On the Development Budget, the Committee had proposed a 20 per cent reduction of capital grants to Government agencies. I am happy to report that this has been fully implemented with the exception of the CDF. The CDF Board is covered under the capital grants to Government agencies and it would have been reduced. So, with the exception of CDF, this has been fully implemented. The CDF will continue to exist. It has been budgeted for. It is my intention that if this House approves the Appropriation Bill now, then we will not need the Vote on Account which we have approved, and we will be in a position to give the entire budget to the Ministries. We do not have to wait for the 50 per cent. They can start utilizing the full amount of the Budget immediately. This is the first time it will be happening; that before the beginning of the financial year, the Ministries have their full allocation. It is also my intention that even on Exchequer issues that by December, the full amount of the CDF should have been disbursed to the Board. This is because we expect that by December the campaigns will be hot and hon. Members may not have time to inspect the development projects. By December, we want all the projects to have been completed. We are in liaison with the Minister in charge of planning. We have told Members of Parliament not to start new projects. We want them to complete all the projects they have started, so that when we go to county governments, nobody will accuse any Member of Parliament of having incomplete or stalled projects. That is the recommendation we have made to Members of Parliament. Mr. Deputy Speaker, Sir, the other measure entailed 100 per cent reduction of all items of a recurrent nature in the Development Budget. Again, we have fully implemented this, except for donor-funded projects, which normally require about five per cent as our own contribution. Our contribution is normally on local expenses such as travel, subsistence for the officers and so on. I am happy to report that, that has been fully implemented, except for donor-funded projects that require Government of Kenya counterpart funding as per the agreement. Hon. Members will also recall that since the submission of the Estimates, the Treasury has received requests for additional funding from other emerging priority areas. Among these are the provision of Free Primary Education (FPE) and Free Secondary Education (FSE). What is happening is that the FPE and FSE are based on enrolment. During the first term, schools compete to enroll as many students as possible, so that they are given this funding. In between during second term there are a lot of changes. So, when it comes to the allocation of the second portion, we find that things have changed, yet schools have already received the first allotment. This is what has brought problems. The situation has been compounded by the way the Ministry has changed. Previously, it was 30 per cent for first term, 20 per cent in second term and 50 per cent third term. Now, because of changing it to 50 per cent in the first term when schools compete to enroll as many students as possible, schools benefit from this. When they change, we are forced to give them additional money. That is what has caused the gap between the Treasury estimates and the actual figures from the Ministry of Education. We are finding a way of reconciling this."
}