Supplementary budget pushes up borrowing by Ksh.125.7 billion

The first 2020-21 supplementary budget estimates approved by the National Assembly will push up borrowing by a further Ksh.125.7 billion increasing Kenya’s debt stock.

On Thursday, Members of Parliament voted to adopt the Budget and Appropriations Committee (BAC) report on the consideration of the supplementary estimates which pushes up gross spending by a similar margin.

The adopted report is expected to now form the basis of the first 2020/21 Supplementary Appropriation Bill set to be presented in the National Assembly.

The report proposes Ksh.80.7 billion in additional net spending and a further Ksh.46.7 billion increase in the Consolidated Fund Services (CFS) to cover rising local debt repayments.

The BAC Committee led by Kieni MP Kanini Kega lauded the extra appropriations for favoring development spending over recurrent even as it flagged fiscal risks from an increased 8.9 per cent of GDP, funding deficit from an original target of 7.5 per cent.


Additional spending on the recurrent side includes Ksh.12.4 billion to cover pending bills in the State’s maize subsidy program and Ksh.8 billion to the Teachers Service Commission (TSC) covering personal emoluments in the fourth phase of implementing the 2017-2021 CBA.

Other additions include Ksh.6.7 billion to the Ministry of Defense and Ksh.6.5 billion to the National Intelligence Service (NIS).

State Departments facing budget reductions meanwhile include Treasury (-Ksh.4.7 billion), Tourism (-Ksh.2.6 billion), Wildlife (-Ksh.2.5 billion), Public Service (-Ksh.2 billion) and University Education (-Ksh.2.2 billion).

On the development side, new adjustments include Ksh.26.5 billion in the State’s bail out to national carrier Kenya Airways, Ksh.2.5 billion for the operation of the Kenya Mortgage Refinancing Company (KMRC) and Ksh.2 billion in grants to KRA.

Rail projects will take the bulk of new development expenditures at Ksh.33.3 billion, the Ministry of Health (MOH), (Ksh.10.9 billion), Ministry of Energy (Ksh.9.2 billion) and the Housing and Urban Development State Department (Ksh.7.8 billion).

The additional budget deficit is to be financed from Ksh.46 billion in net domestic financing and Ksh.80 billion in net foreign financing.

The 2021 Final Budget Policy Statement (BPS) carries the expected rise in borrowing having raised net foreign financing estimates by Ksh.24.7 billion but cuts net domestic borrowing by Ksh.59.9 billion.

Part of total net foreign financing features a Ksh.123.5 billion sovereign bond (Eurobond) whose proceeds are expected to hit State coffers before the end of June.

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