This year's Budget will overshoot last year's by more than Sh47 billion, estimates tabled in Parliament yesterday indicate. The entire Budget Finance Minister Francis Masakhalia will be asking Parliament to approve this afternoon amounts to Sh298.26 billion, an increase from Sh251.48 billion last year.

The higher budget estimate for the government's next financial year could easily translate into a 20 per cent increase in taxes.

The amount in the development budget includes an element of external funding, which is only anticipatory.

The figures outlining Recurrent and Development Expenditure for every ministry and government departments are contained in the printed estimates tabled in the House by Dr Masakhalia on Tuesday.

The Recurrent Expenditure has leapt to Sh244.14 billion from Sh213.06 billion last year while Development expenditure reflects Sh54.12 billion from Sh38.42 billion in the previous budget.

The minister's budget will contain an outline on how the Kenya Revenue Authority will collect revenue to try to bridge the deficit.

According to statistics in the 1999 Economic Survey, the KRA was projected to collect Sh193.48 billion by June 30 this year, leaving a deficit of Sh58 billion.

Dr Masakhalia is expected to cushion the tax payer by spreading the 20 per cent on various tax items available under the Statutes.

He will most likely load the tax on indirect taxes such as VAT and Excise among other mark-ups on tariffs which will generally affect prices of most consumer goods.

The past trend has shown that the government has gone slow on direct taxation such as income tax and Pay As You Earn. Successive Finance Ministers have gradually given tax relief on PAYE, but the tight financial situation will impact on Dr Masakhalia's action this afternoon.

The minister is likely to raise more money from imports by imposing higher tariffs on import duty to protect the local manufacturing industry. The most affected include motor, textiles and sugar, whose imports have affected local plants.

Another option available to the minister will be to float Treasury Bills at the Nairobi Stock Exchange as a way of borrowing money from the public.

The minister may also expect to convince external donors, in particular, the International Monetary Fund which is the confidence rating agency for other donors, to open up.

When former Finance Minister Simeon Nyachae read the Budget last year, he indicated that he did not expect external financing, but promised that relations with IMF would be normalised to resume quick disbursement aid. This is yet to happen.

Although the banking sector may not wish to increase interest rates, the prevailing circumstances on the money market militate against them as the shilling slides against other currencies.

Dr Masakhalia, the technocrat turned politician, who in the past wrote Kenya's budgets for 15 years as Government Chief Economist, will be presenting the financial statement for the first time.

The Kenyan Budget will be read concurrently with Uganda's and Tanzania's budgets in their capitals as part of common policy within the East African Cooperation.

It is not known whether the three Finance Ministers have agreed to implement the "zero rating tariffs system" for the movement of goods within the EAC zone.

When Mr Nyachae presented an austerity Budget last June, he spelt out cost-cutting measures most of which are yet to be implemented.

Although the recurrent budget for the Office of the President reflects a reduction, it is by far the biggest spender in the estimates.

The reduction has been occasioned by the establishment of an independent National Security Intelligence Service, which has been allocated Sh1.8 billion to spend on the recurrent expenditure.

Under Office of the President, the minister will ask the House to approve a new item of Sh100 million towards the national food security for strategic reserves in anticipation of a possible famine next year.

A further 64 million for capacity building for natural disasters is under development estimates.

The Anti-Corruption Unit of Justice Aaron Ringera has been allocated Sh286.38 million to enable it run its services.

Other costs in OP which have escalated include security operations, including the police and expenses for presidential visits in provinces, for which the minister wants Sh44 million.

The Treasury is asking for a total of Sh10.543 billion under two items to pay pending bills. The minister explains that the bills will be paid through bonds after verification.

A total of Sh400 million is being set aside in the Office of the Attorney General for the Constitutional Review, in addition to Sh300 million approved under Supplementary Estimates early this year.

The National Assembly has been allocated Sh100 million for refurbishing of Continental House to provide office accommodation for MPs.

However, the good news for the MPs will be the Sh200 million revolving Fund created in the budget for their car loans. Previously, the loans were administered through the National Bank of Kenya.

The Ministry of East African and Regional Cooperation's budget has leapt to Sh222 million from Sh186 million last year.

The increase is due to big allocations under Comesa (Sh50 million to 87 million), IGAD (Sh44.8 million) and EAC Secretariat (Sh70 million).

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