MIGORI-COUNTY-BUDGET-REVIEW-AND-OUTLOOK-PAPER-2017.pdf, Study Guides, Projects, Research of History

Download MIGORI-COUNTY-BUDGET-REVIEW-AND-OUTLOOK-PAPER-2017.pdf and more Study Guides, Projects, Research History in PDF only on Docsity! i REPUBLIC OF KENYA MIGORI COUNTY BUDGET REVIEW AND OUTLOOK PAPER 2017 SEPTEMBER 2017 A vibrant and Prosperous County ii Contents List Tables ............................................................................................................................................ iii List of Figures ....................................................................................................................................... iii Foreword ............................................................................................................................................... iv Executive Summary .............................................................................................................................. v Abbreviations and Acronyms ............................................................................................................. vi Legal Basis for the Publication of the County Budget Review and outlook paper ....................... vii Fiscal Responsibility Principles in the Public Financial Management Law .................................. vii SECTION ONE: INTRODUCTION .................................................................................................. 1 1.1 Background ................................................................................................................................... 1 1.2 Objective of CBROP ..................................................................................................................... 1 SECTION TWO: REVIEW OF FISCAL PERFORMANCE IN 2016/2017 .................................. 2 2.1 Overview ....................................................................................................................................... 2 2.2 Fiscal Performance for 2016/17 .................................................................................................... 2 2.3 Exchequer Issues ........................................................................................................................... 2 2.4 Conditional grants ......................................................................................................................... 3 2.5 Other Financial Organs ................................................................................................................. 3 2.6 County Expenditure Performance ................................................................................................. 4 2.7 Analysis of Recurrent Expenditure ............................................................................................... 5 2.8 Development Expenditure Analysis ............................................................................................. 5 2.9 Revenue Analysis .......................................................................................................................... 6 2.10 Implication of 2016/17 Fiscal Performance on Financial Objectives Contained in the 2017/18 Budget and County Fiscal Strategy Paper .......................................................................................... 8 SECTION THREE: RECENT ECONOMIC DEVELOPMENT AND OUTLOOK ..................... 9 3.1 Outlook ................................................................................................................................... 9 3.2 Recent Developments ............................................................................................................. 9 3.3 Outlook for the financial year 2017/18 FY ........................................................................... 11 3.4 Risks to the outlook .............................................................................................................. 11 3.4.1 External risks: ...................................................................................................................... 11 SECTION FOUR: RESOURCE ALLOCATION FRAMEWORK .............................................. 12 SECTION FIVE: CONCLUSION AND NEXT STEPS ................................................................. 14 ANNEXES ........................................................................................................................................... 15 v Executive Summary The Migori CBROP gives a highlight of the fiscal performance in the 2016/17 FY budget and its implication on the execution of the 2017/18 FY budget. According to the findings, the budget was funded to the tune of 91.7% as compared to 89.2% in the previous FY 2015/2016. During the period under review the county received 7.086 billion shillings out of which 6.344 billion was spent representing 89.52% expenditure of the funds disbursed. Recurrent and development expenditure accounted for 70.68 per cent and 29.32 per cent respectively. The 8.3% that was unfunded was attributed to the non-release of conditional fund totalling 297.7 M, shortfalls in equitable share of 277M and local revenue collection of 69.7 M. The overall absorption rate for the county was 94.42 percent for recurrent and 62.40 for development expenditure respectively. However, the absorption rates for individual departments varied for both development and recurrent expenditure as can be seen from the report. It is also worth noting that the county surpassed the amount budgeted for the personnel emoluments. The amount budgeted was 2.36 billion while the actual expenditure was Kshs 2.485 billion. There was however an increase in local revenue generated from 339.4M in 2015/2016 to 350.3M in 2016/17 an increase of 3.2% during the period under review. The report has highlighted both the major resources and weak areas for consideration during the FY 2017/18. The report further has highlighted the priority areas that need to be given special attention during the 2017/18 FY budget in order to achieve the county medium term objectives and the Vision 2030 as articulated in the CIDP and the County Fiscal Strategy Paper (CFSP) 2017.Among the priority areas includes; road, water, health and energy development. In order to realise a balanced budget in the 2017/18 FY, and achieve the county’s objectives during the medium term, the report has suggested the need to complete all the on-going project right from the previous financial years, and clear all the pending bills. Finally, the report has proposed a tentative ceiling to sectors during the medium-term period which if well implemented shall witness tremendous growth in the county economy and result to the overall achievement of the county’s vision by the end of the medium term. Recommendations are also suggested on enhancing financial management practices. vi Abbreviations and Acronyms ADP Annual Development Plan BSP Budget Strategy Paper CBROP County Budget Review and Outlook Paper CFSP County Fiscal Strategy Paper CIDP County integrated Development Plan CSWGs County Sector Working Groups FY Financial Year MTEF Medium Term Expenditure Framework PFM Public Financial Management ENT Ear Nose and Throat vii Legal Basis for the Publication of the County Budget Review and outlook paper The County Budget Review and Outlook Paper is prepared in accordance with Section 118 of the Public Financial Management Act, 2012. The law states that: 1. The County Treasury shall prepare and submit to County Executive committee for approval, by 30th September in each financial year, a County Budget Review and Outlook Paper which shall include: a) Actual fiscal performance in the previous financial year compared to the budget appropriation for that year; b) Updated economic and financial forecasts with sufficient information to show changes from the forecasts in the most recent County Fiscal strategy paper c) Information on how actual financial performance for the previous financial year may have affected compliance with the fiscal responsibility principles or the financial objectives in the latest County Fiscal strategy paper; and d) The reasons for any deviation from the financial objectives together with proposals to address the deviation and the time estimated to do so. 2. County Executive committee shall consider the County Budget Review and outlook Paper with a view to approving it with or without amendments, not later than fourteen days after its submission. 3. Not later than seven days after the CBROP has been approved by Executive committee, the County Treasury shall: a) Submit the paper to the Budget and appropriation Committee of the County Assembly to be laid before the County assembly; and b) Publish and publicise the paper not later than fifteen days after laying the Paper before County Assembly. Fiscal Responsibility Principles in the Public Financial Management Law In line with the Constitution, the new Public Financial Management (PFM) Act, 2012, sets out the fiscal responsibility principles to ensure prudency and transparency in the management of public resources. The PFM law (Section 107(b)) states that: 1) The county government’s recurrent expenditure shall not exceed the county government’s total revenue 2) Over the medium term, a minimum of 30% of the County budget shall be allocated to development expenditure 3) The County government’s expenditure on wages and benefits for public officers shall not exceed a percentage of the County government revenue as prescribed by the regulations. 4) Over the medium term, the County government’s borrowings shall be used only for the purpose of financing development expenditure and not for recurrent expenditure. 5) Public debt and obligations shall be maintained at a sustainable level as approved by County Government (CG) 6) Fiscal risks shall be managed prudently 7) A reasonable degree of predictability with respect to the level of tax rates and tax bases shall be maintained, taking into account any tax reforms that may be made in the future 3 Danida funds 10,220,000 10,220,000 10,220,000 0 0% World Bank funds for County Health Facilities 138,220,725 138,220,725 20,004,000 118,216,725 86% Locally Collected Revenue 420,000,000 420,000,000 350,334,348 69,665,652 17% GRAND TOTAL 7,284,063,756 7,730,691,196 7,086,220,000.00 644,471,196 8% Source: Migori County Treasury 2.4 Conditional grants The figure below shows an analysis of conditional grants released in FY 2016/17. Table 2: Conditional grants Analysis for 2016/17FY No. Conditional Grant Amount allocated as provided in CARA 2016 (Kshs.) Actual receipt of the Conditional Grants, FY 2016/17 (Kshs.) Actual receipts as a percentage of Annual Allocation (%) 1 Road Maintenance Fuel Levy Fund 96,769,311 84,859,828 87.7 2 Free Maternal Healthcare 172,348,147 131,394,500 76.2 3 User Fees Foregone 21,882,372 21,882,372 100 4 DANIDA Grant 10,220,000 10,220,000 100 5 World Bank Loan and Grants 169,061,327 20,004,000 11.8 6 Other Loans and Grants 95,744,681 - - Total 566,025,838 268,360,700 47.4 Source: Migori County Treasury Analysis of the conditional grants released during the period under review indicates that, the User Fee Forgone and Danida Grant recorded the highest receipt at 100 per cent of the annual target followed by Road Maintenance Fuel Levy at 87.7 per cent, Free Maternal Healthcare at 76.2 per cent and World Bank loans and Grants at 11.8 per cent 2.5 Other Financial Organs The Health Department received the following amount which was not channelled through the county treasury to support the functions of health services. Table 3: Funds Received in the Health Department Not Channelled through County Treasury Source Amount University of Maryland 127,970,855.00 UNICEF 10,035,120.00 UNFPA 17,742,656.00 TOTAL 155,748,631.00 Source: County Treasury 2017 4 Funds received from University of Maryland amounting to Kshs 127.97 Million was majorly used to pay salaries for the PHASES staff. The 10 million shillings from UNICEF were utilised in establishing community units while the UNFPA funds were mainly for carrying out family planning activities. 2.6 County Expenditure Performance The County spent Kshs.6.344 billion which was 89.53 per cent of the total funds released for operations. This was a increase of 8.08 per cent from Kshs.5.87 billion spent in FY 2015/16. A total of Kshs.4.48 billion was spent on recurrent activities, while Kshs.1.86 billion was spent on development activities. The recurrent expenditure was 93.3 per cent of the funds released for recurrent activities while development expenditure accounted for 81.6 per cent of the funds released for development activities. The recurrent expenditure represented 94.42 per cent of the annual recurrent budget, an increase from 91.9 per cent spent in FY 2015/16. Development expenditure recorded an absorption rate of 62.4 per cent, which was a decrease from 66.7 per cent attained in FY 2015/16. Table 4 below presents budget performance by department in FY 2016/17. Table 4: Budget Performance by Department Department Annual Budget Allocation ( Kshs. Million) Expenditure (Kshs. Million) Absorption rate (%) Total Budget Total Actual Expenditure Rec Dev Total Rec Dev Total Rec Dev Agriculture & Rural Development, Water and Sanitation Services 289.4 455.85 745.25 270.12 175.7 445.82 93.34% 38.54% County Executive 292.67 94 386.67 206.32 96.25 302.57 70.50% 102.39% Public Service Management 645.94 327 972.94 376.65 265.71 642.36 58.31% 81.26% Education, Vocational Training& Sports, Gender Culture & Social Services 216.59 221.5 438.09 279.52 13.8 293.32 129.05% 6.23% Trade & Tourism 81.87 26.44 108.31 74.81 19.15 93.96 91.38% 72.43% Lands physical planning and housing 66.01 47.9 113.91 48.96 17.99 66.95 74.17% 37.56% Finance& Economic Planning 735.99 367.24 1103.23 1,050.386 312.37 1,362.756 142.72% 85.06% Health 1,558.13 365.3 1923.43 1146.6 220.65 1367.25 73.59% 60.40% Environment & Natural Resources 69.76 83.38 153.14 75.29 2.95 78.24 107.93% 3.54% Roads & Public Works 70.51 948.02 1018.53 84.82 691.4 776.22 120.29% 72.93% County Assembly 722.19 45 767.19 870.58 44.5 915.08 120.55% 98.89% TOTAL 4,749.07 2,981.63 7,730.69 4,484.06 1,860.48 6,344.536 94.42% 62.40% Source: Migori County Treasury 5 2.7 Analysis of Recurrent Expenditure The total recurrent expenditure of Kshs.4.484 billion represented 94.42 per cent of the annual recurrent budget of 4.75billion. The amount comprised Kshs. 2.485 billion (55.42 per cent) spent on personnel emoluments and Kshs.1.998.87 billion (44.58 per cent) on operations and maintenance as shown in Figure 1. Expenditure on personnel emoluments represented an increase of 10.44 per cent compared to FY 2015/16 when the County spent Kshs.2.149 billion. In addition, the amount budgeted for personnel emoluments was exceeded by Kshs 125 Million. The Figure below shows a summary of operations and maintenance expenditure by major categories. Analysis of table 4 above reveals that Finance and Economic Planning recorded the highest absorption rates at 142.72 per cent followed by Education Vocational Training Sports and Gender at 129.1 percent and County Assembly at 120.6 percent. Public Service Management sector recorded the lowest absorption rate at 58.3 per cent followed by finance and economic planning at 70.1 per cent and county executive at 70.5 per cent. Figure 1: Migori County, Expenditure by Economic Classification for FY 2016/17 and FY 2015/16 Source: Migori County Treasury 2.8 Development Expenditure Analysis The total development expenditure of Kshs.1.86 billion represented 62.4 per cent of the annual development budget of Kshs.2.98 billion. Table 4 above reveals that county executive recorded the highest absorption rate at 102.4 per cent followed by county assembly at 98.9 per cent and finance and economic planning at 85.1 per cent. The sectors with the lowest absorption rate include environment and natural resources at 3.5 per cent, education at 6.2 per cent and lands and physical planning and housing at 37.6 per cent. Table 5 provides a summarized list of development projects with the highest expenditure during the period under review. 2149.77 1570.54 2152.73 2485.19 1998.87 1860.48 PERSONEL EMOLUMENT OPERATION AND MAINTAINANCE DEVELOPMENT EXPENDITURE BY ECONOMIC CLASSIFICATION FY 2015/16 FY 2016/17 8 Analysis of the local revenue by stream indicates that Cesses recorded the highest amount collected at 92.5 Million followed by vehicle packing fee at 62.9 Million and business permit at 57.1 Million. The revenue streams that recorded the lowest amount collected include: fuel levy at 0.03 Million followed by weights and measures at 0.15 Million and fines penalties and forfeitures at 0.25 million. Some revenue streams surpassed their targets while others recorded smallest percentage compared to the projected target. Physical planning activities, environment and conservers and billboard fees surpassed their targets1107 per cent, 688 per cent and 152 per cent respectively. However, the county was not able to meet its projected revenue target of Kshs 420 million by Kshs 70 million. This could be attributed to unfavourable weather conditions, presence of leakages and strike by the revenue staffs. Some of the revenue streams that did not achieve their target include: parking fees by 25 million shillings, health by 23 million shillings and market fee by 11million shillings. The County deposited all locally generated revenue into the County Revenue Fund account maintained at Central Bank of Kenya (CBK) as required by Article 207 of the Constitution. 2.10 Implication of 2016/17 Fiscal Performance on Financial Objectives Contained in the 2017/18 Budget and County Fiscal Strategy Paper The performance in the FY 2016/17 shall affect the financial objectives set out in the Budget for FY 2017/18 in the following ways: i. The on-going and stalled projects shall be factored into 2017/18 supplementary and 2018/19 FY budgets. ii. The non-release of the conditional grants of KES 297.7 million and the shortfall in revenue generation of KES 69.7 million affected the timely completion of the earmarked projects during the period under review. These projects shall be reprioritised during the 2017/18 and 2018/19 FY consequently tampering with the implementation schedule for 2016/17FY and new project proposals for 2018/19 FY. iii. There is need for regular monitoring and evaluation of project in order to ensure timely completion and value for money. This will go a long way in reducing the number of stalled projects and pending bills. 9 SECTION THREE: RECENT ECONOMIC DEVELOPMENT AND OUTLOOK 3.1 Outlook In achieving the county’s medium-term strategic objectives, greater emphasis shall be focused on strengthening accountability and fiscal discipline in the use of the devolved resources to ensure that devolution achieves the objectives of better service delivery and rapid local economic development. Further measures such as revenue automation shall be instituted to enhance locally generated revenue to support the county’s earmarked objectives as articulated in the ADP 2017-2018. The county’s growth prospect for 2017/18 and the medium term will be supported by increased production in Agriculture and the timely completion of the infrastructural projects to boost economic activities. 3.2 Recent Developments During the year under review a number of developments took place across all the sectors as enumerated here below: I. Agriculture, livestock, fisheries and veterinary and water services. This sector is critical to the county’s economic growth, employment creation and poverty reduction. During the period under review, the sector provided subsidised tractor for hire services to ensure the area under crop farming was increased; distributed tissue culture bananas to farmers to provide alternative crops thus enhance food security and increased income levels. The department also promoted soya bean farming which is on high demand and with ready market and also completed and equipped dining hall and kitchen at Miyare ATC to train farmers on modern farming methods thus increasing productivity. II. Under water subsector, drilling rig, support truck, TPU and terametre were procured and delivered. This has enabled the subsector to carry out ground water exploration, ground water exploitation (Drilling and related works) and test pumping of the existing boreholes within the county with a view of rehabilitating/upgrading to increase accessibility to portable water and effective water coverage in the county. Other achievements made during the period under review include rehabilitation of four minor water schemes i.e Nyatike water supply, Rapogi water supply, Mabera Water project and Ntimaru water project. This approach is expected to increase water coverage in the county to approximately 2500 persons. III. In the fisheries sub-sector, a number of interventions were carried out including: supply of 1222 bags of 20kg quality fish feeds to 307 famers, supply of quality monosex tilapia fingerlings to fish farmers and training of 71 new fish pond farmers in modern fishing farming techniques. These interventions were geared towards enhancing food security in the county and raising income levels thus improving local economy. IV. The veterinary subsector conducted vaccination exercise for 417 animals on East Coast Fever, 32,400 animals against Foot and Mouth Disease and 16,304 animals against Black Water Disease. Fixed Time Artificial Insemination was also carried out in three sub-counties (Kuria West, Awendo and Rongo) where 1047 animals were served. 10 V. In Education, Youth, Culture and Sports sector the major achievements included recruitment of 386 ECDE care givers and 52 VETCs instructors. There was also Purchase of sports equipment, VETCs tools and equipment which aimed at improving the quality of education in early childhood and Vocational centres. Another achievement in this sector included issuance of Governor’s Scholarship for 2 years running benefitting 315 learners. This helped the needy learners in the community to access education. The school feeding programme was meant to increase enrolment and retention in schools. The department of gender conducted trainings on Access to Government Procurement Opportunities (AGPO) for youth, women and persons with disability to apply for 30% Government tenders. VI. The roads and energy sector made the following achievements: opening new roads, improvement of existing roads, construction of bridges and box culverts all over the county. The sector opened 80 new roads totalling to 980km and improved a total of 18 roads totalling to 216km. fifteen box culverts were installed across the county roads and one bridge (Kiringi Bridge) which is still under construction. Uriri-Kabwana Ayego road upgraded to bitumen standards which is ongoing. Some of the equipment procured for use by the sector includes a grader and low loader. Improvement on the road network resulted in increased access and reduced transportation costs. VII. In the trade sector, the county government continued to face lift markets through; construction of 23 market shades, 81 modern toilets and 8 water-borne toilets. This has improved hygiene in the market places hence reduction of disease outbreak. VIII. The county government continued with its comprehensive strategy of improving health systems through construction of the Laboratory and Ear Nose and Throat (ENT) centre at Migori County Referral Hospital and installation of incinerators at Uriri and Nyatike sub-county hospitals. These interventions have improved efficiency and effectiveness of medical services. IX. On Environmental and Disaster Management sector, the county government managed to restore two degraded hilltops i.e. Agongo in Uriri sub-county and Seronga complex in Kuria East sub- county covering a total of 30 acres. Conserved wetland and river rines covering a total of 10kms was conserved for Migori and Misadhi rivers. Greening was done for schools and also on farms. A total of 630 schools and 270 farms benefitted from this project. This has increased the forest cover in the county and conservation of wetlands. These are some of the mitigation measures to address issues of climate change. X. The Public Service Management sector made the following major achievements among others during the implementation of the 2015/16 budget: settled land dispute at Komosoko/Nyamosense Ward Administration office construction site; completed the construction of 6 ward and one sub-county administration offices; commissioned 2 ward administration offices during the period, furnished one ward office; sponsored 20 officers to attend various courses at the Kenya School of Government; conducted a successful County Dialogue Day and prepared various policies e.g. Anti-corruption, Public Participation and Village Units Administration policies. This resulted to effective and efficient service delivery. 13 Veterinary Services and Water Lands, Housing, Physical Planning and Survey 200,000,000 187,735,691 195,245,119 2.50% 4% 4% Roads, Public Works, Transport and Energy 950,000,000 1,155,441,072 1,270,985,179 14.10% 11% 10% Trade Development and Regulation 180,000,000 201,608,997 207,657,267 2.30% 4% 3% Health 630,000,000 1,860,540,475 2,046,594,523 9.40% 9% 10% Education, Youth, Sports, Culture and Social Development 250,000,000 533,962,000 555,320,480 3.40% 5% 4% Public Service Management 200,000,000 746,458,841 776,317,195 2.80% 4% 4% Public Service Board 110,000,000 70,004,216 71,404,300 1.70% 2% 2% ICT 172,500,000 300,380,000 309,391,400 2.30% 3% 3% Finance and Economic Planning 900,000,000 568,769,121 614,270,651 12.40% 11% 8% Environment and Disaster Management 180,000,000 125,185,502 127,689,212 1.90% 3% 2% County Assembly 655,500,000 736,791,732 810,470,905 9.40% 10% 10% County Executive 445,000,000 561,676,000 589,759,800 4.70% 5% 5% Salaries 1,766,400,000 Total 7,159,400,000 7,780,620,647 8,365,738,390 100% 100% Source: County Treasury 14 SECTION FIVE: CONCLUSION AND NEXT STEPS The set of policies outlined in this CBROP reflect the changed circumstances and are broadly in line with the County Integrated Development Plan and the fiscal responsibility principles outlined in the PFM Act 2012. They are also consistent with the national strategic objectives pursued by the County Government as a basis of allocation of public resources. Details of the strategic objectives are provided in the 2018-2022 County Integrated Development Plan. As budgetary resources are finite, it is critical that CSWGs and Ministries prioritize their programmes within the available ceilings to ensure that use of public funds are in line with county government priorities. There is also need to ensure that current resources are being utilised efficiently and effectively before further funding is considered for programmes. CSWGs needs to carefully consider detailed costing of projects, strategic significance, deliverables (output and outcomes), alternative interventions, and administration and implementation plans in allocation of resources. The County should implement the following recommendations in order to improve budget execution: Efforts should be made to clear all the on-going projects and the pending bills before commencements of new projects. i. The procurement plan and the budget should be strictly adhered to when making any commitment or payment for the purpose of financial management. To ensure this e- Procurement and IFMIS should be strictly adhered to in all time ii. The County treasury should ensure issued funds are utilised for intended purposes through timely exchequer advices to the departments and stringent controls on application of funds. iii. Automation of Revenue Collection and Health Management Information system should be done to improve revenue collection and reporting. iv. The county should strive to set realist targets especially in revenue collection in order to minimise stalled projects and pending bills. v. In collaboration with the national government the county should institute measures to address challenges related to IFMIS 15 ANNEXES Table 7: Disbursement Schedule –July 2016 to June 2017 by the Controller of Budget Period Development Recurrent Total 000 000 000 JULY 2016 DISBURSEMENT 370,220 370,220 AUGUST 2016 DISBURSEMENT 380,000 148,000 528,000 SEPTEMBER 2016 DISBURSEMENT 180,000 670,000 850,000 OCTOBER 2016 DISBURSEMENT 200,000 20,000 220,000 NOVEMBER 2016 DISBURSMENT 420,000 798,000 1,218,000 DECEMBER 2016 DISBURSEMENT 150,000 362,000 512,000 JANUARY 2017 DISBURSEMENT 160,000 360,000 520,000 FEBRUARY 2017 DISBURSEMENT 50,000 50,000 MARCH 2017 DISBURSEMENT 150,000 480,000 630,000 APRIL 2017 DISBURSEMENT 180,000 420,000 600,000 MAY 2017 DISBURSEMENT 150,000 390,000 540,000 JUNE 2017 DISBURSEMENT 310,000 738,000 1,048,000 TOTAL 2,280,000 4,806,220 7,086,220 PERCENTAGE 32.2% 67.8% 100% Source: Migori County Treasury Table 8: Quarterly Disbursement Schedule PERIOD 2015/16 FY 2016/17 FY 1ST QUARTER TRANSFER 466,948,170 1,748,220,000 2ND QUARTER TRANSFER 2,013,713,983 1,950,000,000 3RD QUARTER TRANSFER 1,459,213,031 1,200,000,000 4TH QUARTER TRANSFER 1,896,897,943 2,188,000,000 TOTAL 5,836,773,127 7,086,220,00 Source: Migori County Treasury