Government spending to shoot up by sh379.7b
Jun 05, 2007
GOVERNMENT'S spending will shoot up by sh379.7b next financial year, a 9% increment, according to a finance ministry’s budget framework paper for 2007/8. Sh4,106.3b was budgeted as government expenditure this financial year compared to sh4,486.02b next financial year.
By Mary Karugaba
GOVERNMENT'S spending will shoot up by sh379.7b next financial year, a 9% increment, according to a finance ministry’s budget framework paper for 2007/8. Sh4,106.3b was budgeted as government expenditure this financial year compared to sh4,486.02b next financial year.
The report attributes the rise to additional expenditures under the parliamentary commissioners, increased allowance rates and number of MPs, graduated tax compensation and the Commonwealth Heads of Government Meeting-related activities.
It also attributes the rise to interventions and measures that will enhance economic growth and development, domestic and external competitiveness through increased production and value addition.
However, the report indicates that government’s domestic arrears payments of sh280b will take a first call on the resources.
“This is because these are commitments for which the Government has already consumed goods and services.
“This also includes retirement benefits (pension) for senior citizens,†explains the report.
The report projects an increase of sh41.1b in interest payment to donor projects.
It adds that whereas the additional amount available for expenditure is sh379.7b, the net additional resources available for allocation to priorities next financial year are only sh253.7b.
According to the paper, revenue outturn the next financial year is projected at about sh3trillion.
Currently, a large proportion of the national budget is financed by donors.
However, with a shift from project support to budget support, donors are tightening their grips on benchmarks required before the funds are released.
As a result, the Government has also tightened guidelines required by sectors intending to undertake projects before external resources are secured for them.
“It has been observed that this procedure has been flaunted to the extent that a lot of external resources have remained utilised.
“The loans provided by the International Development Agency and the African Development Bank has attracted commitment charges which has robbed the economy of vital resources,†says the report.
The reports explains that beginning next financial year, sectors will be required to provide work plans and prove availability of counterpart funding within the budgets to trigger the use of external resources.
The Government has also recommended that no additional external resources will be approved for any sector, which has unutilised resources.
The Government has in addition entered into a number of undertakings with donors including sustaining the share of Poverty Action Fund in the budget.
The funds currently account for about 40% of this year’s budget.
To meet the increased budget, the Government plans to make ‘modest’ adjustments in tax rates or propose new taxes.
GOVERNMENT'S spending will shoot up by sh379.7b next financial year, a 9% increment, according to a finance ministry’s budget framework paper for 2007/8. Sh4,106.3b was budgeted as government expenditure this financial year compared to sh4,486.02b next financial year.
The report attributes the rise to additional expenditures under the parliamentary commissioners, increased allowance rates and number of MPs, graduated tax compensation and the Commonwealth Heads of Government Meeting-related activities.
It also attributes the rise to interventions and measures that will enhance economic growth and development, domestic and external competitiveness through increased production and value addition.
However, the report indicates that government’s domestic arrears payments of sh280b will take a first call on the resources.
“This is because these are commitments for which the Government has already consumed goods and services.
“This also includes retirement benefits (pension) for senior citizens,†explains the report.
The report projects an increase of sh41.1b in interest payment to donor projects.
It adds that whereas the additional amount available for expenditure is sh379.7b, the net additional resources available for allocation to priorities next financial year are only sh253.7b.
According to the paper, revenue outturn the next financial year is projected at about sh3trillion.
Currently, a large proportion of the national budget is financed by donors.
However, with a shift from project support to budget support, donors are tightening their grips on benchmarks required before the funds are released.
As a result, the Government has also tightened guidelines required by sectors intending to undertake projects before external resources are secured for them.
“It has been observed that this procedure has been flaunted to the extent that a lot of external resources have remained utilised.
“The loans provided by the International Development Agency and the African Development Bank has attracted commitment charges which has robbed the economy of vital resources,†says the report.
The reports explains that beginning next financial year, sectors will be required to provide work plans and prove availability of counterpart funding within the budgets to trigger the use of external resources.
The Government has also recommended that no additional external resources will be approved for any sector, which has unutilised resources.
The Government has in addition entered into a number of undertakings with donors including sustaining the share of Poverty Action Fund in the budget.
The funds currently account for about 40% of this year’s budget.
To meet the increased budget, the Government plans to make ‘modest’ adjustments in tax rates or propose new taxes.