The budget-making process at both levels of government is facing major disruptions and realignments amid the coronavirus pandemic.
This has forced the national government back to the drawing board.
The Nation has learnt that the National Treasury is preparing a second supplementary budget and reallocate the resources to the health and water ministries, which are at the forefront in the fight against Covid-19.
In what is set to further complicate the money supply challenges between the different levels of government, travel restrictions and social distancing requirements announced by the Health ministry have grounded physical public participation processes, which are required before budgets are approved.
On Sunday, the Council of Governors asked the Controller of Budget and National Treasury to ensure the 47 devolved units receive the allocations for February and March to prevent a shutdown of their operations at a time when health services, which are mostly devolved, are needed the most.
But the biggest disruption will be at the National Treasury, which is faced with agonising decisions and must now go back to the drawing board to prepare a new budget that appreciates revenue shortfalls expected from the partial lockdown.
Treasury Cabinet Secretary Ukur Yatani had indicated that the government would spend Sh2.7 trillion in the new financial year that starts in July in a budget that had an ambitious economic growth of 6.2 per cent.
This projection has since been halved to 3.4 per cent, and that budget is no longer realistic.
The adjustments must also reflect the funding gap nightmare that Kenya finds itself in as well as where the government will get the resources to support an economic stimulus package expected to be announced in coming days.
Kikuyu MP Kimani Ichung’wa, who is the chairman of the Budget and Appropriations Committee, said the Covid-19 outbreak forced parliament to go into recess two days ahead of the schedule.
However, he noted that the pandemic is yet to significantly affect parliament’s role in the budget process.
Mr Ichung’wa said the Treasury is preparing estimates for the new financial year as well as the second supplementary budget for the current fiscal year, both of which must be realigned to the current economic realities.
“The low hanging fruits are travel, conference and training budgets. These will have to go since we do not expect that anyone will travel even into the first half of the new financial year. Revenues are going to take a hit, and we must now redirect resources to the health and water ministries,” he told the Nation, adding that the country cannot afford more debts.
When parliament resumes, it will consider the new budgets. But should the outbreak persist, parliament will have to find more creative ways to fulfil the public participation requirement, he noted.
The budget committee had planned to visit 10 counties for public participation in May. “If we are unable to travel, then we have the option of asking the public to submit written memoranda for consideration,” he said.
The Kikuyu MP said a spring meeting in the US scheduled for next month has already been cancelled.
He was to accompany officials from the Treasury to discuss various financing options with the International Monetary Fund and the World Bank.
Suba South MP John Mbadi, a member of the budget committee, said pubic participation is crucial.
However, the law does not expressly provide that the committee must gather people together as a means of achieving it.
“If things don’t improve, we will be forced to adopt the modern way of doing it. We shall place an advert in the newspaper and call on people to submit their memorandum on the estimates submitted by the Treasury,” Mr Mbadi said.
“We may also reach out to organised groups that have a direct interest in economic matters, such as the Institute of Certified Public Accountants of Kenya, the Institute of Economic Affairs and the Kenya Association of Manufacturers,” he added.
Other key actors are government ministries, the Kenya Revenue Authority and the Central Bank of Kenya.
The Constitution delineates that public participation is a major component of the process and unless different committees and government agencies come up with ways of doing this without movement, then it will be impossible to do this under the current environment.
The making of the budget of the 2020/21 fiscal year, which begins on July 1, had reached the home stretch when the pandemic struck.
This is the most eventful quarter that requires a lot of engagements between the Treasury, committees of parliament, the Executive, the Judiciary, county governments, assemblies and the Auditor-General.
Some of the parliamentary committees, such as the Budget and Appropriations Committee, are so large and attract membership of up to 50 legislators, and constituting such a meeting would be difficult.
The Constitution also whittled down Treasury’s budget-making powers by apportioning them to parliament and other oversight authorities, such as the Auditor-General.
It also spelt out strict timelines that must be adhered to by various actors.
The key events between February and June include submission of four crucial documents by the Treasury, which must happen by February 15.
They are the National Budget policy Statement (BPS), the medium-term debt management strategy paper, the Division of Revenue Bill and the County Allocation of Revenue Bill.
The National Assembly and the Senate are now at the stage of dealing with the two county bills, which unlock money to the devolved units.
According to the budget calendar, parliament should approve the BPS by February 28.
At the county level, finance executives should table their respective County Fiscal Strategy papers before assemblies by February 28.
Also, Treasury Cabinet secretary is required to submit the statement on the Debt Management Strategy to the Commission on Revenue Allocation and the Intergovernmental Budget and Economic Council.
He should then publish and publicise the statement. In March, the Treasury publishes and publicises BPS after tabling it before parliament.
The BPS version at the counties – known as the Fiscal Strategy Paper – should also be published and publicised after being tabled before assemblies by March 7.
County assemblies are required to have approved them by mid-March. Parliament must consider the Division of Revenue and County Allocation of Revenue bills and approve them with or without amendments by March 15.
The deadline for counties to publish their third-quarter budget implementation reports is April 30.
This is also the deadline given to the Controller of Budget to publish and publicise the third quarter budget implementation reports for the national and county governments.
The tabling of the budget estimates by the National Treasury in parliament should happen before April 30.
It is within this time that the other government agencies — the Judiciary and the Parliamentary Service Commission — are required to submit their own independent budgets before the House.
Additional reporting by Ibrahim Oruko
