Bloomberg News

Kenyan Budget Spending to Climb 16% Next Year, Kenyatta Says

June 02, 2011

(Updates with finance minister comments starting in second paragraph.)

June 2 (Bloomberg) -- Kenya plans to increase spending by 16 percent to 1.16 trillion shillings ($13.3 billion) in the fiscal year through June 2012 as investment on roads and power expands, Finance Minister Uhuru Kenyatta said.

Expenditure on infrastructure in the budget will jump about 35 percent to 221 billion shillings from a year earlier, Kenyatta told reporters today in Nairobi, the capital. The budget will also set out spending to implement a constitution enacted in August, and prepare for presidential and parliamentary elections in 2012, he said.

“We intend to spend substantial resources on the key social sectors of education, water provision, youth empowerment and food security to lessen the burden of rising inflation,” Kenyatta said.

Budget spending in the East African nation’s fiscal year through June is estimated at 998.3 billion shillings, Planning Minister Wycliffe Oparanya said on May 17. Growth in East Africa’s biggest economy is projected to slow this year as dry weather curbs agricultural production, an industry that accounts for a quarter of the economy, and Kenyan household spending eases due to higher inflation.

The World Bank today reduced its growth projection for Kenya in 2011 to 4.8 percent from 5.3 percent while the International Monetary Fund said on May 24 the economy will expand between 5 percent and 5.4 percent. Growth was 5.6 percent in 2010. Inflation accelerated to a 25-month high of 13 percent in May.

Budget Speech

The government will pledge 544 billion shillings for the recurrent budget, a measure of operating expenditure that includes salaries, in the 2011-12 fiscal year, down a fifth from the year earlier, Kenyatta said. It will increase development expenditure by 30 percent to 398 billion shillings, Kenyatta said.

Kenyatta will give his annual budget speech in parliament on June 8.

--Editors: Gordon Bell, Ana Monteiro

To contact the reporters on this story: Johnstone Ole Turana in Nairobi at jturana@bloomberg.net; Sarah McGregor in Nairobi at smcgregor5@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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