Kenya: 2023 Budget Planning Starts Amid Raila, Ruto Supreme Court Battle

The Treasury has directed Cabinet Secretaries and CEOs of parastatals to draft Kenya’s 2023 budget based on policies implemented by President Uhuru Kenyatta’s government, despite uncertainty about when the next Head of State would take office after Raila Odinga filed a petition at the supreme court.

  • A hazy outlook has prompted the Treasury to begin the budget-making process under present rules.
  • According to Yatani, the formulation of the FY 2023/24 and medium-term budgets will concentrate on the targeted economic intervention.
  • A successful petition would invalidate the presidential election, necessitating a new vote 60 days after the ruling.

Directions by Treasury

The Treasury has directed Cabinet Secretaries and CEOs of parastatals to draft the 2023 budget for the fiscal year beginning July 2023 based on policies implemented by President Uhuru Kenyatta’s government, despite uncertainty about when the next Head of State would take office.

Treasury Cabinet Secretary Ukur Yatani has urged accounting officials to begin preparing policy papers, reports, and Bills within the current budget framework in advance of the Supreme Court’s verdict on presidential petitions.

The seven-judge Supreme Court convened this morning for a pre-trial conference to discuss guidelines for the adjudication of nine petitions concerning the contested result of the presidential election on August 9.

Raila Odinga, the head of the opposition, has filed a Supreme Court appeal against Deputy President William Ruto’s close election win, adding to the uncertainty surrounding the transition to a new government.

If the Supreme Court overturned the election results and dissolved the divided Independent Electoral and Boundaries Commission (IEBC), it would be months until a new President assumed office.

Considerations for change under the new government

A hazy outlook has prompted the Treasury to begin the budget-making process under present rules. However, the process factor in the fact that the figures may be adjusted under a new President.

“At the time of publishing this circular, the transition to the new administration remained incomplete,” Mr Yatani stated in the August 24 circular.

Regulation 57 of the Public Finance Management Regulations, 2015 compels the National Treasury to alter the budget as a consequence of new policies or government reorganization that may arise.”

According to Rule 57 of the Public Finance Management (PFM) Regulations, the national government may establish new departments or ministries, dissolve existing ones, and reassign tasks from one ministry to another during a fiscal year. Changes in the number of ministries or departments, as well as their duties, impact their budgets.

“In the event of such reorganizations,” Mr Yatani said, “the National Treasury will guide ministries, departments, and agencies (MDAs) on the appropriate adjustments required in both the FY 2022/23 budget (which ends next June) and the preparation of the FY 2023/24 and medium-term budget.”

The PFM Act 2012 requires Treasury CS to release the medium-term spending framework instructions by August 30. The CS must follow this up with the inauguration of sector working groups comprised of accounting officials from MDAs by September 9.

Targeted economic intervention and tightened fiscal space in Kenya’s 2023 budget

According to Yatani, the formulation of the FY 2023/24 and medium-term budgets will concentrate on the targeted economic intervention. The intervention will boost recovery programs to reposition the country on a sustainable and inclusive growth path.

“These get inculcated into normal government programs to guarantee a seamless transition and continuing program execution.”

This consideration implies that the ministries’ 2023 budget will be based on plans established under the Jubilee government.

President Kenyatta’s successor will have to deal with a flurry of issues. The issues include a spike in fuel and food costs caused by the Ukraine crisis. The new government must also address growing unemployment. A pile of debt accumulated during the departing President’s ten years in power to fund growth must remain a priority.

Policy experts believe the next President will have limited budgetary space to provide immediate relief.

Crucial constitutional timelines for Kenya’s 2023 budget

On several grounds, Mr Raila Odinga has urged the court to overturn the August 9 vote. The grounds include a discrepancy between turnout numbers and the overall election outcome. Odinga also claims that the IEBC failed to tally ballots from 27 constituencies. The discrepancies rendered the result unreliable and unaccountable. Dr Ruto has disputed the charges.The IEBC remains divided and has issued opposing responses. Four commissioners rejected the outcome, while the chairman and two others supported it.

Mr Odinga also wants the IEBC chairman, Wafula Chebukati, ruled ineligible to occupy public office. A successful petition would invalidate the presidential election, necessitating a new vote 60 days after the ruling.

Removal, dismissal and replacement of the IEBC commissioners via a tribunal and vetting by MPs may take months. These efforts could push the fresh elections into next year.

Budgetary timetable in Kenya’s 2023 budget

Ministries have until September 21 to assess and revise projects for the fiscal year 2023/24 and provide progress reports. They must then submit a draft budget review and outlook report (BROP) by the end of September. Moreover, they must construct medium-term budget frameworks, including budget estimates and policy goals.

The cabinet must adopt the draft BROP by October 23 and present it to Parliament four days later.

MDAs have until the end of November to prepare medium-term budget recommendations. These recommendations include stakeholder and public feedback. The same must be presented to the Treasury on December 1. Consequently, they get tabled for fine-tuning via a consultative briefing with Cabinet secretaries and senior secretaries on December 6.

Between December and February 14, during the introduction of the papers in Parliament, the draft Budget Policy Statement, specifying spending limits, will also get prepared. MDAs will be expected to prepare draft budget estimates for Cabinet approval between March 3 and April 13 of next year. This is well ahead of their submission in Parliament on April 27 alongside the Finance Bill.

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