THE clamor for higher pay by civil servants raised last financial year's recurrent budget by Sh50 billion, Treasury data shows.
Apart from demands for increased salaries by teachers, doctors and the police, the Kenya Defence Forces intervention in Somalia saw the recurrent expenditure shooting up.
Teachers salary increments shot up by Sh30 billion while defense related expenditures consumed Sh6 billion, the Treasury's post election economic and fiscal report shows.
"Expenditure pressures presented high risks to the stability of the budget for FY 2012/13 in the face of resource requirements for the implementation of the decentralised governance system," says the report in part.
The report says that total expenditure and net lending amounted to Sh1.1 trillion against a target of Sh1.2 billion resulting in a Sh177.3 billion. The deficit was attributed to lower absorption recorded in both recurrent and development expenditures by line ministries.
Recurrent expenditure amounted to sh808.4 billion, against a target of Sh819.7 billion. Underperfomance was recorded in salaries and wages as well as pensions which accounted for Sh19.9 billion and STeachers on strike recently. An additional Sh30 billion was used to pay them.h11.8 billion respectively.
"Delayed payments of salaries at the close of the year explains the shortfalls in wages and salaries and the postponement of pension areas due to legal challenges occassioned the under spending under pension," says the report.
On the revenue side, by the end of June 2013, total cumulative revenue collection including appropriation in aid was below target by Sh47.3 billion. Ordinary revenue collection totaled Sh779.4 billion against a target of Sh822.7 billion. This resulted in an underperfomance of Sh43.2 billion. Cumulative ministerial appropriation in aid recorded a deficit of Sh4.1 billion.
Kenya Revenue Authority said last month it could have missed its 2012 revenue targets by Sh99 billion after Parliament failed to pass the contested VAT Bill. This, coupled with the challenges in implementing the 10 per cent exercise tax on transaction fees for financial services such as M-Pesa and bank charges, hurt KRA's initial target forcing it to review the amount downwards. KRA was supposed to have collected a total of Sh881.2 billion for the financial year 2012/2013.
According to KRA, though economic conditions have not picked up following the March 4 elections which lead to a Sh9 billion loss in revenues, various tax administrative measures have helped to seal loopholes and increase revenues for the last quarter of the financial year ended June 30. For the period between April and June this year, a total of Sh240 billion has been collected, a 15 per cent growth from the Sh208.7 billion raised over a similar period the previous year.