Winners, losers in Yatani allocations
The government has reaffirmed its appetite for big infrastructure spending with massive allocations to the sectors hoping to spike growth but also seal President Uhuru Kenyatta’s s legacy.
The Budget, which is the last under the Jubilee administration, surged from Sh3.1 trillion for the financial year 2021/22 to Sh3.3 trillion for 2022/23.
National Treasury and Planning Cabinet Secretary Ukur Yatani said the State had maintained its development and recurrent expenditure targets amid a tough economic environment.
Treasury allocated Sh513 billion to the education sector to fast-track the transition to Competency-Based Curriculum (CBC), Sh317.8 billion was directed to the security agencies and Sh245.9 billion was allocated to the roads and transport sector to complete ongoing projects and construction of new ones.
“In line with the Public Finance Management (PFM) Act, the government has adhered to the fiscal responsibility of observing the required 30 per cent of its expenditure on development. In this financial year the allocation to development in the budget is 34 per cent,” Yatani said.
The inability of counties to raise adequate resources to sustain themselves continues to weigh down on the national government with the devolved units landing an equitable share of Sh370 billion.
The transformation in the energy sector is also expected to gain momentum after the State allocated a budget of Sh95 billion towards supporting power generation initiatives.
Parliament and Judiciary also recorded increased allocations with the National Assembly getting an additional Sh12 billion to run its operations while Judiciary got an additional Sh1 billion.
Overall Judiciary will now receive Sh18.9 billion from Sh17 billion in the last fiscal year while Parliament got Sh50.2 billion from last financial year’s Sh38 billion to run its operations.
The key sectors that will be looking to reap big from the Budget this year are local vehicle assembly and the health sector.
From the health allocation, Sh62.3 billion will fund activities and programmes for the attainment of Universal Health Coverage including the exclusion of medical equipment from import tax.
“In order to promote local manufacturing of pharmaceutical products, I propose to introduce VAT exemption on inputs used in the manufacture of medical ventilators and breathing appliances.”
The local public service vehicle assembly will also be looking to benefit from the exclusion of taxes to expand their operations locally.
Yatani pointed out that locally assembled passenger service vehicles will enjoy a tax relief as the government looks to boost the sector.
Despite increased calls by Kenyans to the government to instigate measures to reduce the cost of commodities the Treasury only allocated Sh46.7 billion to the agriculture sector.
With the price of fertiliser has doubled last year, Sh3 billion was allocated to subsidise farmers during the current planting season. The government is now proposing to allocate a further Sh2.7 billion fertiliser subsidy to cushion farmers.
Losers
Yatani said the Jubilee administration has refocused spending to sustain economic recovery from the Covid-19 pandemic and support social welfare programmes meant to benefit low-income and poor Kenyans.
Initiatives towards equity and poverty reduction received an allocation of Sh68.9 billion, Social protection Sh39.4 billion, manufacturing Sh10.1 billion, environment Sh110.8 billion, ICT 15.6 billion and housing 27.4 billion.
While the betting craze has been subdued by the health pandemic and the tough economic times, Treasury has noted the effects gambling has had on society and imposed a 15 per cent excise tax on all betting advertising fees by TV stations.
This will come as a huge blow to the sector that has in recent times been the punching bag for taxes.
Betting, nicotine products and alcohol have come under heavy taxation as the government looks to tap into the leisure segment.
However, as President Uhuru will be looking to leave a legacy the large fiscal deficit is set to be a heavy burden on his successor after the August General Election, with the growing spending appetite scarcely being satiated by the revenue being collected by the exchequer.
“In view of the limited fiscal space, the government will embark on rationalising the existing portfolio of projects being implemented by the national government and issue regulations for managing public investments. The government has developed the Public Investment Management Information System, which is expected to be a repository of all projects implemented by the National and County governments,” Yatani said in the budget statement.
