The national budget in three minutes
The Sunday Nation
Nairobi,
04 July 2010
The Minister for Finance read his budget for 2010/11 and he is planning to spend close to one trillion shillings. Some media reports said that this is the largest budget in history and I found that comment curious. When you think about it, every budget is always larger than the one of the previous year. Therefore, there is nothing special about the current one being greater than all previous ones. Take it from me; even the one for next year will be bigger than all the others in history!
If you didn’t know, one trillion can mean different
things to different people. In the
Unfortunately, I did not get a chance to listen to
this year’s budget speech, but I managed to get a copy of the full text
from the Ministry of Finance website (www.treasury.go.ke). In a
nutshell; the government plans to spend Sh998.8 billion in the coming
financial year. This means the trillion we heard in the media about was
the
If you divide that sum equally amongst 40 million Kenyans, it comes to about Sh25,000 per person over the next 12 months. That is slightly over Sh2,000 per month. Now, depending on your world view, you can either see this as the amount of money that will be spent on you, or the money which you will need to contribute in order to keep our national affairs running. I leave that up to you.
Out of the Sh998.8b, about Sh320b (32 per cent) will go towards development projects and Sh675b (68 per cent) to recurrent expenditure. While development expenses are somewhat self-explanatory (roads, hospitals, schools etc), recurrent costs need elaboration. They include administrative expenses (salaries, rents, consumables etc) and loan repayments (including interest and other attendant costs).
Now those figures may not mean much unless they are compared to some past record. The year 2002 provides a good point of comparison because this was when KANU (Mr. Uhuru Kenyatta’s party) lost the leadership of the country for the first time since independence.
In that year, the total budget was Sh324b. That’s about one third of this year’s figure. Another way of looking at it is that the budget has been growing at an average of 15 per cent every year. A word caution is necessary here: this is not the rate of economic growth!
Of the Sh324b, only Sh43b was earmarked for development in 2002 and the rest was meant for recurrent expenses. In the 2010 budget, the figure is Sh320b – seven and a half times higher. In fact, the development expenditure this year will be almost equal to the total budget of 2002.
Another improvement is the distribution between development and recurrent expenses. It is 32-to-68 respectively this year, compared to 13-to-87 in 2002. That means we are increasing spending on development faster than that on consumption.
 |
 |