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{
    "id": 625782,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/625782/?format=api",
    "text_counter": 436,
    "type": "other",
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    "content": "for development expenditure and personal emoluments of the National Government shall be binding for the next two years. As Members are aware, the BPS is underpinned by the Public Finance Management Act, 2012 and the Public Finance Management Regulations, 2015. The Committee was able to establish that the Statement largely adhered to the provisions of the law. However, the Committee observes that there are some provisions of the law that were not adhered to. In particular, the lack of adherence to fiscal responsibility principles as set out in Section 15 of the Public Finance Management Act and section 26(1) of the Public Finance Management Regulation. For example, the BPS failed to factor in compensation of employees from State- owned enterprises as required under PFM Regulation 26(1)(a). Secondly, there was no information provided relating to the level of budgetary expenditures by economic and functional classifications (PFM Regulations 29(1)(a)(ii)). According to the BPS 2016, the economy is projected to grow at 5.5 per cent in 2014/2015, 5.8 per cent in 2015/2016 and 6.1 per cent in 2016/2017. The Committee is concerned that due to the recent and external economic developments, these growth and revenue projections may be unrealistic and as has been the case, this often leads to revising expenditure and increasing debt. The Government projects inflation to remain within the target in 2016 and the medium term. Nevertheless, it is important to note that the expenditure pressures and the high import bill arising from the general election to be held in 2017 may result in higher inflation. For the 2016/2017 Financial Year, the Government targets revenue collection of approximately Kshs1.5 trillion from Kshs1.36 trillion in the 2015/2016 Financial Year. The ordinary revenue is projected to be Kshs1.38 trillion compared to Kshs1.25 trillion in the 2015/2016 Financial Year. The Appropriations-in-Aid (A-in-A) are projected to be Kshs116.2 billion compared to Kshs103.2 billion in the 2015/2016 Financial Year. A review of the approved budgets against actual revenue performance in previous years indicates a systematic over-estimation of revenue. The underperformance of revenue has a negative impact on expenditure performance. Therefore, the revenue targets should be reviewed for a more realistic projection to be given. Hon. Speaker, the total expenditure and the net lending is projected at Kshs2.05 trillion or 28.3 per cent of the Gross Domestic Product (GDP) compared to Kshs2 trillion in the 2015/2016 Financial Year. The contraction in expenditure as a proportion of GDP is witnessed both in Recurrent as well as in the Development Expenditure. The total Recurrent Expenditure is projected at Kshs1.19 trillion compared to Kshs1.09 trillion in the 2015/2016 Financial Year, while the total development and net lending is projected at Kshs 667.7 billion compared to Kshs718.5 billion in 2015/2016 Financial Year. The emphasis to contain growth of expenditures by the Government is admirable since this is the very first time in recent years that expenditures are contracting. However, there is no clear indication of whether there is a shift of resources from Recurrent Expenditure to Development Expenditure since both are set to reduce in the 2016/2017 Financial Year. Indeed, this reduction of Development Expenditure of the medium term implies the need for the Government to find alternative sources of finance to meet the ever-increasing development needs. Fiscal deficit, including grants, is set to reduce from Kshs569.2 billion in the 2015/2016 Financial Year to Kshs495.5 billion in the 2016/2017 Financial Year. This reduction will be sustained gradually over the medium term to Kshs372.7 billion in the 2018/2019 Financial Year. The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}