The Right Priorities? What Kenya s National Government Spends Money On, 2013/ /16

Transcription

1 The Right Priorities? What Kenya s National Government Spends Money On, 2013/ /16

2 Presentation Highlights Background to the 2015/16 budget: recent trends in budget allocation and expenditure for 2013/14 and 2014/15 (first half of FY) Implications of past performance for 2015/16. What is new in 2015/16 budget? 2

3 What should we look at broadly in the budget? How much is going for recurrent versus capital over time? How much is going to which sectors over time? (actually set by BPS) How are priorities changing at program and SP level? (set by budget estimates) How much are we actually spending versus what we budgeted? 3

4 Let s start with recurrent v. development, 2013/14 4

5 Does the trend change in 2014/15? We have actual expenditure data for the first half of the year and we use that to project what the full year spending might be. The next chart shows that we expect to see an improvement this financial year compared to 2013/14 for development expenditure. 5

6 If these projections hold, then our share of actual development spending will have risen between 2013/14 and 2014/15 from 22% to 37%...a pretty major shift 6

7 What share of the budget has been going to which sector? 2013/14 and 2014/15 For the last two years, education has been allocated the largest share of the budget. The top three sector in terms of allocations have not changed but their share of the total allocations has. While the share of education remained the same in 2013/14 and 2014/15 the share going to infrastucture+energy rose and security declined slightly 7

8 The change in the relative share of the budget over time is a good indicator of our priorities. 8

9 Budget implementation efficiency trends? Allocations to sectors should ideally be fully spent Implementation challenges should be addressed to avoid future allocations that will still remain unspent. For the current FY (2014/15), we compared half year implementation data with similar information from the first half of 2013/14. There is an overall improvement in total budget absorption in 2014/15 compared to 2013/14, from 31 percent to 34 percent. Absorption of the development budget in particular improved by 10 percentage points in that same period, from 16 percent to 26 percent. 9

10 Half-year spending in 2013/14 and 2014/15 by sector 2013/14 (% Expenditure to Gross Estimates) 2014/15 (% Expenditure to Gross Estimates) Sectors Recurrent Development Total Recurrent Development Total Change in Absorption Rates Lands and Housing 38% 8% 15% 47% 37% 39% 24% Security 39% 12% 16% 36% 26% 36% 20% Agriculture 27% 14% 17% 38% 34% 35% 18% Planning and Devolution 34% 23% 25% 46% 40% 42% 16% State Administration 35% 12% 22% 33% 14% 23% 1% Education 48% 9% 43% 45% 19% 42% -2% Water and Regional Development 41% 25% 30% 30% 26% 28% -2% Parliament, AG, Judiciary and Constitutional Commissions 44% 12% 38% 40% 12% 35% -2% International Relations and Commerce 28% 35% 30% 32% 18% 26% -4% Infrastructure + Energy 37% 7% 36% 31% 26% 27% -9% Health 37% 46% 41% 46% 15% 32% -9% Gender, Youth and Culture 51% 64% 54% 42% 45% 43% 10-11% Total 41% 16% 31% 40% 26% 34% 3%

11 What can we see from 2014/15 performance so far? We can project how well we will do based on half-year performance data. The way to do this is to look at past years and see how much we tend to spend in the second half of the year compared to the first half When we do this, we see that we tend to spend on average (over last 3 years) about 1.4 times as much in the last half of the year as during first 6 months We use ratios for each sector to project for the full year 11

12 Projected Expenditure Rates for the Full Year 2014/15 Projected Full Year Projections 2014/15 Sectors Recurrent Development Total Gender,Youth and Culture 100% 100% 100% Lands and Housing 100% 100% 100% Planning and Devolution 100% 100% 100% Agriculture 88% 100% 97% Security 93% 100% 93% Parliament, AG, Judiciary and Constitutional Commissions 100% 50% 91% Education 90% 61% 87% Infrastructure + Energy 51% 78% 75% Health 100% 42% 74% Water and Regional Development 66% 72% 70% State Administration 91% 40% 65% International Relations and Commerce 85% 34% 64% Total 90% 74% 83% 12

13 Is external funding related to low MDA budget absorption? Often budgeted external funding expected by MDAs at the beginning of the year does not fully materialize. The correlation between absorption rate and external funding for MDAs is negative and fairly strong. In 2012/13, the correlation is -0.49, and in 2013/14 it is What these numbers mean is that as a ministry s external funding rises, its absorption rate tends to be lower. Here is an example from 2013/

14 Relationship between absorption and external funding 14

15 What are implications of all of this for 2015/16? Our ability to spend the development budget is rising, but we still tend to overestimate it We tend to spend more on education and security than we budget, but less on infrastructure, reflecting in part low development spending capacity Sectors with a lot of external funding tend not to be able to spend as much as we hope 15

16 So, let s look at 2015/16 The MDA budget in 2015/16 is Sh 1.5 trillion which is a 24% increase from 2014/15. The recurrent vs development estimate split stands at 52% to 48% compared to 58% to 42% in 2014/15. The allocations to service the public debt as a percentage of the total budget has decreased from 23% in 2014/15 to 18% in 2015/16. However, external funding for MDAs has increased from 16% to 23% in the same period 16

17 What are the Sector Allocations in 2015/16? Infrastructure+energy has the highest allocation of 27% of the total MDAs budget. Infrastructure is mainly driven by a huge increase in its development budget. Over half (51%) of the entire development budget is under this sector. Education and security take 2 nd and third in terms of their share of the total budget. 17

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19 What is happening at program level? Sectors were largely set by the BPS, although there are some changes in the budget What are the big changes within sectors or within ministries in this year s budget? The biggest changes at program level are highlighted on the next page What do we think about these? 19

20 Highest increase in allocations to programme in % and absolute terms between 2014/15 and 2015/16 Vote Programme % Change in Allocation Vote Programme Absolute Increase in Allocation 1 State Department of Transport Rail Transport 461% State Department of Transport Rail Transport The Presidency Cabinet Affairs 366% Ministry of Defence Defence 13 3 State Department for Planning National Statistical Information Services 291% Ministry of Energy and Petroleum Power Transmission and Distribution 13 4 Teachers Service Commission Governance and Standards 279% Teachers Service Commission Teacher Resource Management 13 State Department for Commerce Tourism Development and 5 and Tourism Promotion 255% State Department for Interior Policing Services 11 6 Ministry of Foreign Affairs and International Trade International Trade and Investments Promotion 212% State Department of Infrastructure Road Transport 10 7 Ministry of Sports Culture and Arts Sports 163% State Department for Planning Gender & Youth Empowerment 8 8 State Department for Devolution Accelerated ASAL Development State Department for Commerce and 129% Tourism Tourism Development and Promotion 6 Ministry of Land Housing and Urban Urban and Metropolitan Development Development 6 10 Programmes with highest % increase 9 Ministry of Energy and Petroleum Administrative Services 125% Salaries and Remuneration Commission Programmes with highest aggregate increase (billions) Salaries and Remuneration Management 109% Ministry of Energy and Petroleum Power Generation 5 Average % Increase for MDAs 22% Total Absolute Increase for MDAs

21 Under each MDA, programmes compete for resources based on priorities attached to each. Using the Ministry of Health example, the General Administration, Planning and Support Services "has a huge increase in absolute funding. What could be the cause of this? Looking at SP details helps give some detail on the increase. 21

22 Change is Programme Shares of the Total Health Budget 2014/15 and 2015/16 Vote 1081 Ministry of Health PART F: Summary of Expenditure by Programmes, 2015/ /2018 Programme Approved Estimates Programme share to Ministry Total Gross Estimates2014/ / /2016 Programme share to Ministry Total 2015/16 Change in programme Shares P.1 Preventive & Promotive Health Services % 12% -8% P.2 Curative Health Services % 40% 1% P.3 Health Research and Development % 9% -1% P.4 General Administration, Planning & Support Services % 26% 4% P.5 Maternal and Child Health 4 8 9% 13% 5% Total Expenditure for Vote 1081 Ministry of Health

23 Example of Sub-Programme Details 23

24 Thank You 24