COUNTY GOVERNMENT OF MOMBASA COUNTY TREASURY MOMBASA COUNTY BUDGET REVIEW AND OUTLOOK PAPER ©AUGUST 2022 © Budget Review and Outlook Paper (CBROP) 2022 To obtain copies of the document, please contact: Public Relations Office Department of Finance and Economic Planning County Assembly Building P. O. Box 90440-80100 MOMBASA, KENYA Tel: +254-41-2311531 Fax: +254-41-2311531 countyfinance@mombasa.go.ke/msabudgetep@gmail.com The document is also available on the internet at: www.mombasa.go.ke Mombasa County Budget Review and Outlook Paper 2022 pg. 2 Foreword The Mombasa County Budget Review and Outlook Paper (CBROP) 2022, has been prepared against a background of economic slowdown occasioned by the ongoing Russia-Ukraine conflict, effects of the COVID-19 containment measures, higher-than expected inflation worldwide triggered by higher global oil and food prices and the impact of the global monetary policy that has created tighter financial condition. As a result, the global economy is projected to slow down to 3.2 percent in 2022 from 6.1 percent 2021. It presents the recent economic developments and actual fiscal performance of the FY 2021/2022 and makes comparisons to the budget appropriations for the same year. It further provides updated forecasts with sufficient information to show changes from the projections outlined in the latest County Fiscal Strategy Paper (CFSP), developed in October 2021. In this Paper, we will also provide an overview of how the actual performance of the FY 2021/2022 affected the County’s compliance with the fiscal responsibility principles and the financial objectives as detailed in the 2021 CFSP. This is the last CBROP that has been prepared within the second-generation County Integrated Development Plan 2018-2022 that outlines the County’s planning framework that guides county programmes budgeting, project funding, monitoring and evaluation.In this CBROP the County is re- emphasizing the Government’s fiscal policy strategy, which focuses on maintaining a strong revenue effort and shifting composition of expenditure from recurrent to productive capital expenditures and optimally ensuring efficiency and effectiveness in the use of public resources. The critical programmes to be implemented are expected to stimulate the County’s socio-economic development. The key County proposed priority areas are; Enhanced health services, Sustainable waste management services, Augment accessibility to safe potable water and sustained food security, Integrated Quality Education, Gender empowerment, Youth & Sports improvement, Affordable Housing Services and Land management as well as Public and onsite Infrastructure development which will be realigned and reemphasized in the 2023-2028 third generation CIDP. The implementation of programs under these strategic sectors is expected to raise efficiency and productivity in the County’s economy and in turn accelerate and sustain inclusive growth, create opportunities for productive growth and ensure high standards of living for Mombasa County residents. The County Treasury will link this CBROP with the other budgetary policy documents as stipulated in the PFM Act. MS. MARYAM MBARUK COUNTY EXECUTIVE COMMITTEE MEMBER FINANCE AND ECONOMIC PLANNING Mombasa County Budget Review and Outlook Paper 2022 pg. 3 Acknowledgement This policy document is prepared in line with the provisions of the Public Financial Management Act, 2012 Article 118(1) (a). The preparation of this County Budget Review and Outlook Paper continues to be a collaborative effort from an array of expertise of professionals in the County Treasury. The information in this policy document has been obtained from the Mombasa County Treasury. We are grateful for their inputs. The document provides the fiscal outturn for the FY 2021/22, the macro-economic projections and set sector ceiling for the FY 2023/24 and the Medium Term Budget. The document also provides an overview of how the actual performance of the FY 2021/22 affected compliance in the fiscal responsibility principles and the financial objectives outlined in the PFM Act. The economy is operating under tight global financial condition as a result of the ongoing Russia- Ukraine conflict and higher than expected inflation worldwide. This calls for prioritization on Government projects that will ensure our economy remains resilient and continue to register growth, and will have the highest impact and benefits to Kenyans. Therefore, All Sector Working Groups (SWGs) are expected to ensure that their budgets are aligned to the overall Government priorities while taking into account the resource constraints. Immense appreciation goes to the Executive Member for Finance and Economic Planning for the good will and guidance provided during the entire period of preparation of this document. A core team in the Budget and Economic Planning unit spent a significant amount of time consolidating this policy document. We are particularly grateful to Ms. Jane Githui (Director Budget & Economic Planning) and Mr. Affan Mohamed (Director Revenue) for working tirelessly in the development of this document. MS. ASHA ABDI CHIEF OFFICER FINANCE AND ECONOMIC PLANNING Mombasa County Budget Review and Outlook Paper 2022 pg. 4 Table of Contents Foreword ..................................................................................................................................................... 3 Acknowledgement ...................................................................................................................................... 4 Legal Background ....................................................................................................................................... 7 Executive Summary .................................................................................................................................... 8 I. INTRODUCTION ................................................................................................................................. 9 II. REVIEW OF FISCAL PERFORMANCE IN 2021/22 ............................................................................ 10 III. OVERVIEW .................................................................................................................................... 11 IV. FISCAL PERFORMANCE FOR 2021/2022 ..................................................................................... 11 LOCAL REVENUE .................................................................................................................................. 11 EXCHEQUER ISSUES ............................................................................................................................. 13 Analysis of Grants Allocated and Disbursed from 2017/18 – 2021/22 ............................................. 15 COUNTY DEPARTMENTAL EXPENDITURE........................................................................................... 16 Growth of Expenditure from 2017/2018-2021/2022 ....................................................................... 17 Percentage Budget Absorption 2017/18 – 2021/22 ........................................................................... 18 DETAILED REVENUE ANALYSIS ............................................................................................................ 19 REVENUE ANALYSIS FOR 2021/2022 ................................................................................................. 24 Expenditure ....................................................................................................................................... 24 Overall Balance and Financing ......................................................................................................... 25 Implication of 2021/22 fiscal performance on the set financial objectives .................................... 25 Updated Expenditure Projections against CFSP' 21 Projections, 2021/22- 2023/24 ......................... 29 V. RECENT ECONOMIC DEVELOPMENTS AND OUTLOOK ................................................................. 30 A. Recent Economic Developments ................................................................................................... 30 B. Medium Term Economic Outlook ................................................................................................. 33 Recent Economic Developments in the County .................................................................................... 34 Medium Term Fiscal Framework .......................................................................................................... 37 Risks to the Outlook .............................................................................................................................. 38 VI. RESOURCE ALLOCATION FRAMEWORK ............................................................................................ 40 A. Adjustment to 2022/23 Budget ....................................................................................................... 40 B. Medium-Term Expenditure Framework........................................................................................... 40 C. Departments Budgets and Programs Prioritization .......................................................................... 43 D. Budget Framework 2023/2024 ................................................................................................... 43 VII. CONCLUSION AND WAY FORWARD ............................................................................................... 44 ANNEXES................................................................................................................................................... 45 Mombasa County Budget Review and Outlook Paper 2022 pg. 5 Abbreviations and Acronyms ADP Annual Development Plan BOPA Budget Outlook Paper BPS Budget Policy Statement BSP Budget Strategy Paper CBROP County Budget Review and Outlook Paper CFSP County Fiscal Strategy Paper CG County Government CIDP County Integrated Development Plan COVID-19 Corona Virus Disease of 2019 FY Financial Year GDP Gross Domestic Product GoK Government of Kenya KNBS Kenya National Bureau of Statistics SDG Social Development Goals MTEF Medium Term Expenditure Framework MTP Medium-Term Plan MV-2035 Mombasa Vision 2035 NDA Net Domestic Assets NFA Net Foreign Assets PERs Public Expenditure Review PFM Public Financial Management PPP Public Private Partnership SBP Single Business Permit SGR Standard Gauge Railway SWGs Sector Working Groups VAT Value Added Tax V 2030 Vision 2030 Mombasa County Budget Review and Outlook Paper 2022 pg. 6 Legal Background The County Budget Review and Outlook Paper (CBROP) have been prepared by the County Treasury in accordance with Section 118 of the Public Finance Management (PFM) Act. The Act states that a County Treasury;  Shall prepare a County Budget Review and Outlook Paper in respect of the county for each financial year; and  Submit the paper to the County Executive Committee by the 30th September of that year. The main objectives of a CBROP are to specify;  The details of the actual fiscal performance in the previous year compared to the budget appropriation for that year;  The updated economic and financial forecasts in relation to the changes from the forecasts in the most recent County Fiscal Strategy Paper (CFSP);  Any changes in the forecasts compared with the CFSP;  How actual financial performance for the previous financial year may have affected compliance with the fiscal responsibility principles, or the financial objectives in the CFSP for that financial year; and  Reasons for any deviation from the financial objectives in the CFSP together with proposals to address the deviation and the time estimated for doing so. In summary, this CBROP is expected to present a review of the fiscal performance for the previous year, 2021/22 financial year. The CBROP is expected to provide a summary of the national macroeconomic outlook and how this will affect the County’s economic performance. The above statistics would partly provide the basis for the revision of the Financial Year 2022/23 budget in the context of the Supplementary Estimates, as well as setting out the broad fiscal parameters for the next budget and medium term. The fiscal framework presented in this document provides a strong basis for building our common future under the current constitutional dispensation. The paper also presents an overview of budget financing sources that includes the equitable share, local revenue and grants. In the last section, the paper offers conclusion and the way forward. Mombasa County Budget Review and Outlook Paper 2022 pg. 7 Executive Summary The 2022 BROP has been prepared in accordance with the PFM Act, 2012 and its Regulations. The document provides an overview of the government's financial performance for the FY 2021/22 including compliance with the fiscal responsibility principles and the financial objectives spelt out in the PFM Act. It also shows macro-economic projections and the sector ceilings for the FY 2023/24 and the medium-term budget as well as information on variations from the projections outlined in the 2022 Budget Policy Statement. The 2022 CBROP has been prepared against a background of global economic slowdown reflecting the impact of the ongoing Russia-Ukraine conflict, effects of COVID-19 containment measures in China; higher-than-expected inflation worldwide triggered by higher global oil and food prices and the impact of the global monetary policy that has created tighter financial conditions. As a result, global growth is projected to slow down to 3.2 percent in 2022 from 6.1 percent in 2021. The Kenyan economy demonstrated remarkable resilience and recovery to the COVID-19 shock due to the diversified nature of the economy and the proactive measures by the Government to support businesses. The economy expanded by 7.5 percent in 2021, a much stronger level from a contraction of 0.3 percent in 2020. The growth momentum continued in the first quarter of 2022 with the economy expanding by a remarkable 6.8 percent compared with a growth of 2.7 percent in a similar quarter in 2021. Leading indicators of economic activity show continued strong performance in the second quarter of 2022, supported by strong activity in transport and storage, wholesale and retail trade, construction, information and communication, and accommodation and food services. As such, the economy is expected to remain resilient at 5.5 percent in 2022, and grow by an average of 6.0 percent over the medium term. This will be supported by a broad-based private sector growth, including recoveries in agriculture while the public sector consolidates. This outlook will be reinforced by the ongoing implementation of the strategic priorities of the Government under the “Big Four” Agenda and the Economic Recovery Strategy. The economic growth over the medium term will further be supported by implementation of strategic interventions contained in the Fourth Medium Term Plan (2023-2027) of the Vision 2030 aimed at driving the economy towards a sustainable growth path. The document also provides an overview of how the actual performance of the FY 2021/22 affected our compliance with the fiscal responsibility principles and the financial objectives spelt out in the PFM Act as well as information showing changes from the projections outlined in the 2021 Budget Policy Statement. Mombasa County Budget Review and Outlook Paper 2022 pg. 8 I. INTRODUCTION 1. The law requires CBROP to present the fiscal outcome for the previous financial year and to state how this outcome affects the financial objectives contained in that year’s CFSP. In line with the law, this CBROP contains a review of the fiscal performance of the financial year 2021/22, updated macroeconomic forecast, and deviations from the Fiscal Strategy Paper November 2021. 2. The objective of the CBROP is to provide a review of the previous fiscal performance and how this impacts the financial objectives and fiscal responsibility principles set out in the Fiscal Strategy Paper (CFSP). This together with updated macroeconomic outlook provides a basis for revision of the current budget in the context of Supplementary Estimates and the broad fiscal parameters underpinning the next budget and the medium term. Details of the fiscal framework and the medium-term policy priorities will be firmed up in the next Budget Policy Statement (BPS). 3. The CBROP is a key document in linking policy, planning and budgeting. The County Government is at the tail end in the implementation of the County Integrated Development Plan (CIDP) 2018-2022, through the subsequent Annual Development Plan’s currently undertaking the 2021 and the Annual Budget estimates for the 2022-2023 financial year. 4. The PFM Act enacted in 2012 has set high standards for compliance with the Medium-Term Expenditure Framework (MTEF) budgeting process. Therefore, it is expected that the sector ceilings for the Third Year of the MTEF provided in the previous CFSP will form the indicative baseline sector ceilings for the next budget of 2023/24. However, following the fiscal outcome of 2021/22 and the updated macroeconomic framework these sector ceilings have been modified as indicated in the annex of this CBROP. 5. The updated macroeconomic outlook will be firmed up in the next CFSP to reflect any changes in economic and financial conditions. We are committed to maintain the trend of economic growth and development in line with the expectations and commitments that the County has made to the people of Mombasa County. Towards this end, we shall ensure there is transparency and accountability by relaying our performance indicators to the public as well as publicizing other publications as required by the Constitution and the Public Finance Management Act. Mombasa County Budget Review and Outlook Paper 2022 pg. 9 II. REVIEW OF FISCAL PERFORMANCE IN 2021/22 6. This section is meant to review how the actual financial performance for the 2021/22 financial year may have affected compliance with the fiscal responsibility principles, or the financial objectives in the CFSP for that financial year. 7. In line with the Constitution, the 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 15) states that: a) Over the medium term, a minimum of 30% of the budget shall be allocated to development expenditure b) The Government’s expenditure on wages and benefits for public officers shall not exceed a percentage of the Government revenue as prescribed by the regulations (35%) as per the Public Finance Management Regulations 2015. c) Over the medium term, the Government’s borrowings shall be used only for the purpose of financing development expenditure and not for recurrent expenditure d) Public debt and obligations shall be maintained at a sustainable level as approved by County Assembly (CG) e) Fiscal risks shall be managed prudently f) 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. Mombasa County Budget Review and Outlook Paper 2022 pg. 10 III. OVERVIEW 8. The fiscal performance in 2021/22 was sluggish with a slight improvement in own source revenue collection despite a shortfall in equitable share disbursement and donor funding. The County was able to realize Kshs. 11,046,905,821 which translates to 79 percent of the supplementary budget of Kshs 14,000,000,000. In view of the above the County had a 21 percent budget deficit of Kshs. 2,953,094,179. 9. The fiscal performance at the end was dismal due to the non-remittance of the equitable share allocation as well as the withdrawal of the conditional grants that were previously allocated to the County. Another factor that has been a hindrance is the unremitted donor funding which continues to lead to the under performance of the revenues. 10. On budget absorption, the County was able to absorb Kshs. 9,620,434,315 which translates to 69 percent of the supplementary budget of Kshs 14,000,000,000 amounting to recurrent expenditure of Kshs. 8,430,255,152 and development expenditure of Kshs 1,190,179,163 out of the budgeted amount. In view of the above the County had a 31 percent budget deficit of Kshs. 4,379,565,685. IV. FISCAL PERFORMANCE FOR 2021/2022 LOCAL REVENUE Table 1: Local Revenue Collection Over Five Financial Years MONTH 2017/2018 2018/2019 2019/2020 2020/2021 2021-2022 JULY 129,214,413 91,417,758 110,950,638 133,177,640 290,898,301 AUGUST 79,711,499 131,853,605 164,871,323 180,063,924 158,294,767 SEPTEMBER 99,058,707 75,372,653 195,639,679 207,752,314 324,609,448 OCTOBER 91,899,794 195,060,885 192,425,344 200,978,869 240,688,839 NOVEMBER 90,313,887 147,641,305 208,065,464 195,076,359 161,645,883 DECEMBER 88,038,962 362,828,365 228,108,277 162,790,308 220,922,958 JANUARY 218,665,976 434,584,730 286,649,313 441,650,127 498,998,855 FEBRUARY 202,052,584 422,738,253 421,483,469 415,598,494 479,635,817 MARCH 952,278,303 733,336,511 634,763,565 541,583,202 515,926,400 APRIL 440,470,531 468,186,699 203,268,450 280,251,148 290,568,789 MAY 336,178,479 203,642,080 160,817,790 211,868,868 138,306,690 JUNE 440,130,574 405,994,209 508,759,315 343,741,925 299,135,806 TOTAL 3,168,013,709 3,672,657,053 3,315,802,627 3,314,533,178 3,619,632,553 Mombasa County Budget Review and Outlook Paper 2022 11 ANALYSIS OF OWN SOURCE REVENUE COLLECTION 2013/2014- 2021/2022 FINANCIAL YEAR REVENUE COLLECTED 2013/2014 1,696,542,251 2014/2015 2,491,655,330 2015/2016 2,944,968,224 2016/2017 3,166,240,961 2017/2018 3,168,013,709 2018/2019 3,672,657,053 2019/2020 3,315,802,627 2020/2021 3,314,533,178 2021/2022 3,619,632,553 Mombasa County Budget Review and Outlook Paper 2022 12 COMPARATIVE OWN SOURCE REVENUE COLLECTION 2013/14- 2021/22 4,000,000,000 3,500,000,000 3,000,000,000 2,500,000,000 2,000,000,000 1,500,000,000 1,000,000,000 500,000,000 0 REVENUE COLLECTED 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2019/2020 2020/2021 2021/2022 EXCHEQUER ISSUES 11. Exchequer issues from the National Government continues to dip two years in a row as shown below. Table 2: Actual Monthly Exchequer Issues Over Five Financial Years 2017/2018– 2021/2022 MONTH EXCHEQUER EXCHEQUER EXCHEQUER EXCHEQUER EXCHEQUER ISSUES ISSUES 2017-2018 ISSUES 2018-2019 ISSUES 2019-2020 ISSUES 2020-2021 2021-2022 JULY 597,970,752 0 0 0 0 AUGUST 0 430,761,965 0 0 605,388,325 SEPTEMBER 473,286,618 587,699,500 1,228,083,300 0 643,225,095 OCTOBER 0 741,181,901 632,224,439 1,164,561,750 643,225,095 NOVEMBER 996,790,289 875,741,969 0 828,146,904 1,248,613,420 DECEMBER 843,101,778 822,680,000 824,676,155 574,671,000 825,326,491 JANUARY 866,001,087 944,297,016 949,232,625 798,466,182 643,225,095 FEBRUARY 683,706,112 794,895,339 1,592,730,838 628,955,904 845,033,993 MARCH 712,190,289 0 564,636,000 599,925,750 605,388,325 APRIL 78,786,439 1,515,161,166 40,134,590 599,925,750 712,922,804 MAY 824,219,384 54,151,120 741,084,750 574,844,314 864,906,837 JUNE 2,786,366,845 2,449,218,601 1,517,641,228 2,293,217,209 234,558,066 TOTAL 8,862,419,593 9,215,788,577 8,090,443,924 8,062,714,763 7,427,273,268 DISBURSED Mombasa County Budget Review and Outlook Paper 2022 13 EXCHEQUER ISSUES FROM 2017/2018 – 2021/2022 FYs Exchequer Issues Analysis 17/18-21/22 10,000,000,000 8,000,000,000 6,000,000,000 4,000,000,000 2,000,000,000 0 EXCHEQUER ISSUES 2017-2018 EXCHEQUER ISSUES 2018-2019 EXCHEQUER ISSUES 2019-2020 EXCHEQUER ISSUES 2020-2021 EXCHEQUER ISSUES 2021-2022 EQUITABLE SHARE ALLOCATIONS OVER THE YEARS FINANCIAL 2017/2018 2018/2019 2019/2020 2020/2021 2021/2022 YEAR ALLOCATION 8,154,000,000 8,226,800,000 7,057,950,000 7,437,750,000 7,567,354,061 Equitable Share Analysis 17/18 - 21/22 8,400,000,000 8,200,000,000 8,000,000,000 7,800,000,000 7,600,000,000 7,400,000,000 7,200,000,000 7,000,000,000 6,800,000,000 6,600,000,000 6,400,000,000 ALLOCATION 2017/2018 2018/2019 2019/2020 2020/2021 2021/2022 Mombasa County Budget Review and Outlook Paper 2022 14 Analysis of Grants Allocated and Disbursed from 2017/18 – 2021/22 GRANTS DISBURSED TO THE COUNTY Grant Details 2017/2018 2018/2019 2019/2020 2020/2021 2021/2022 Total Level 5 Hospital Grant 388,439,306 388,439,306 388,439,306 388,439,308 - 1,553,757,226 User Fees Forgone 23,514,312 23,385,934 23,385,934 23,385,934 - 93,672,114 DANIDA 23,261,504 27,337,500 24,562,500 20,070,000 41,990,166 137,221,670 World Bank-KDSP Level I 49,809,062 - 30,000,000 45,000,000 - 124,809,062 World Bank KDSP Level II - 259,416,946 - - 201,635,625 461,052,571 World Bank – Health Grant 10,736,032 - - - - 10,736,032 World Bank-IDA: Transforming Health Systems for - 27,473,711 33,184,038 51,996,243 - 112,653,992 Universal Care Project IDA(WB)-WSDP - - 247,584,920 228,221,154 - 475,806,074 Covid 19 Fund - - 100,168,000 - - 100,168,000 Development of Youth Polytechnics 30,586,320 - 25,473,298 18,484,894 - 74,544,512 Agriculture Sector Support Program II - 6,937,481 9,437,481 10,250,771 - 26,625,733 Road Maintenance Levy Grant 182,073,057 255,997,699 150,258,446 218,916,458 221,681,742 1,028,927,402 Total 708,419,593 988,988,577 1,032,493,923 1,004,764,762 465,307,533 4,199,974,388 Mombasa County Budget Review and Outlook Paper 2022 15 COUNTY DEPARTMENTAL EXPENDITURE 12. The figures and tables below illustrate the County’s departmental utilization of funds both in development and recurrent. They present the fiscal performance for the FY 2021/22 and the deviations from the Original and Revised budget estimates. Table 3: Departmental %Age 2021-2022 Recurrent expenditure S/NO DEPARTMENTS Approved Budget Final Budget FY Expenditure Total %age FY 2021/2022 2021/2022 3011 The Executive 356,491,789 213,928,018 122,942,152 57.5% 3012 County Assembly 779,254,392 679,254,392 625,798,250 92.0% 3013 Public Service Board 130,000,000 75,257,533 51,881,804 68.9% 3014 Finance and Economic Planning 634,128,550 1,291,633,692 1,590,281,001 123.1% 3015 Energy, Environment and Waste Management 612,000,000 582,592,293 446,403,599 76.6% 3016 Education, Information Technology and Mv. 2035 596,000,000 292,510,043 203,213,070 69.5% 3017 Health 3,271,787,854 2,647,848,919 2,059,127,730 77.8% 3018 Water, Environment and Natural Resources 130,000,000 38,133,595 18,778,069 49.2% 3019 Youth, Gender, Sports and Cultural Affairs 400,000,000 269,639,144 190,421,154 70.6% 3020 Trade, Tourism and Investments 445,160,775 448,948,898 361,133,257 80.4% 3021 County Planning, Land and Housing 273,000,000 244,163,962 182,090,118 74.6% 3022 Transport, Infrastructure and Public Works 510,000,000 367,080,838 287,657,434 78.4% 3023 Agriculture, Fisheries, Livestock and Co-Operatives 273,499,950 159,789,666 119,831,506 75.0% 3026 Devolution and Public Service Administration 906,176,640 2,804,841,515 2,170,696,009 77.4% REC TOTAL 9,317,499,950 10,115,622,508 8,404,089,867 83.2% 2021/2022 DEPARTMENTAL DEVELOPMENT EXPENDITURE S/NO DEPARTMENTS Approved Budget Final Budget FY Expenditure %age FY 2021/2022 2021/2022 TOTAL 3011 County Executive 30,000,000 1,960,000 1,926,207 98% 3012 County Assembly 200,000,000 200,000,000 - - 3013 Public Service Board 20,000,000 1,890,000 1,857,414 98.3% 3014 Finance & Economic Planning 326,500,050 233,974,435 71,152,512 30.4% 3015 Energy, Environment & Waste Management 305,000,000 170,198,863 94,621,349 55.6% 3016 Education, Information Technology & MV 2035 431,000,000 109,611,587 5,259,560 4.8% 3017 Health Services 370,000,000 403,093,395 8,366,721 2.1% 3018 Water, Sanitation & Natural Resources 1,100,000,000 800,500,000 217,684,297 27.2% 3019 Youth, Gender, Sports and Cultural Affairs 500,000,000 237,182,301 112,758,703 47.5% 3020 Trade, Tourism & Investment 400,000,000 9,999,678 5,276,996 52.8% 3021 Lands, Housing and Physical Planning 480,000,000 421,726,867 60,291,301 14.3% 3022 Transport, Infrastructure and Public Works 680,000,000 1,228,792,159 602,243,084 49.0% 3023 Agriculture, Fisheries, Livestock and Co-operatives 230,000,000 48,434,715 6,607,398 13.6% 3026 Devolution & Public Service Administration 110,000,000 17,013,494 2,133,621 12.5% TOTAL 5,182,500,050 3,884,377,492 1,190,179,163 32.3% Mombasa County Budget Review and Outlook Paper 2022 16 2021/2022 TOTAL DEPARTMENTAL EXPENDITURE DEPARTMENTS Approved Budget FY Final Budget FY Total Expenditure %age 2021/2022 2021/2022 3011 County Executive 386,491,789 215,888,018 124,868,359 58 3012 County Assembly 979,254,392 879,254,392 625,798,250 71 3013 Public Service Board 150,000,000 77,147,533 53,739,218 70 3014 Finance & Economic Planning 960,628,600 1,525,608,127 1,661,433,513 109 3015 Energy, Environment & Waste Management 917,000,000 752,791,156 541,024,948 72 3016 Education, Information Technology & MV 2035 1,027,000,000 402,121,630 208,472,630 52 3017 Health Services 3,641,787,854 3,050,942,314 2,067,494,451 68 3018 Water, Sanitation & Natural Resources 1,230,000,000 838,633,595 236,462,366 28 3019 Youth, Gender, Sports and Cultural Affairs 900,000,000 506,821,445 303,179,857 60 3020 Trade, Tourism & Investment 845,160,775 458,948,576 366,410,252 80 3021 Lands, Housing and Physical Planning 753,000,000 665,890,829 242,381,419 36 3022 Transport, Infrastructure and Public Works 1,190,000,000 1,595,872,997 889,900,518 56 3023 Agriculture, Fisheries, Livestock and Co-operatives 503,499,950 208,224,381 126,438,905 61 3026 Devolution and Public Service Administration 1,016,176,640 2,821,855,009 2,172,829,629 77 TOTAL 14,500,000,000 14,000,000,000 9,620,434,315 69 Growth of Expenditure from 2017/2018-2021/2022 S NO. DEPARTMENTS 2017/2018 2018/2019 2019/2020 2020/2021 2021/2022 3011 County Executive 305,472,424 367,868,652 170,907,637 134,579,861 124,868,359 3013 Public Service Board 69,337,345 82,182,927 42,223,122 57,481,487 53,739,218 3014 Finance & Economic Planning 2,270,755,715 2,724,996,907 1,929,435,855 1,674,353,623 1,661,433,513 3015 Environment, Waste Management and Energy 504,702,480 737,985,956 507,605,972 581,863,283 541,024,948 3016 Education, Information Technology & MV 2035 469,161,316 452,661,776 429,302,668 553,209,274 208,472,630 3017 Health Services 2,500,178,693 3,242,469,680 3,261,210,911 3,166,401,627 2,067,494,451 3018 Water, Sanitation & Natural Resources 95,072,297 68,635,562 282,665,964 333,232,081 236,462,366 3019 Youth, Gender, Sports & Cultural Affairs 323,768,818 280,429,106 181,268,380 454,099,872 303,179,857 3020 Trade, Tourism & Investment 212,092,539 486,693,687 286,680,390 450,113,691 366,410,252 3021 Lands, Housing & Physical Planning 276,249,787 311,766,515 214,961,915 487,982,311 242,381,419 3022 Transport & Infrastructure & Public Works 1,871,526,082 2,017,723,065 1,239,171,000 1,121,356,757 889,900,518 3023 Agriculture, Fisheries, Livestock & Cooperatives 194,126,312 325,189,634 141,925,916 175,574,698 126,438,905 3026 Devolution & Public Service Administration 712,108,321 1,621,225,848 1,389,053,177 1,107,593,596 2,172,829,629 Total Expenditure 9,804,552,129 12,719,829,315 10,076,412,906 10,889,466,230 8,994,636,065 Budgeted 11,901,862,365 13,689,901,837 12,925,617,143 13,066,172,243 13,120,745,608 % Absorption 82 93 76 83 69 Mombasa County Budget Review and Outlook Paper 2022 17 Percentage Budget Absorption 2017/18 – 2021/22 Percentage Budget Absorption Analysis 17/18- 21/22 100 80 60 40 20 0 % Absorption 2017/2018 2018/2019 2019/2020 2020/2021 2021/2022 Actual Expenditure Analysis 17/18- 21/22 14,000,000,000 12,000,000,000 10,000,000,000 8,000,000,000 6,000,000,000 4,000,000,000 2,000,000,000 0 2017/2018 2018/2019 2019/2020 2020/2021 2021/2022 Mombasa County Budget Review and Outlook Paper 2022 18 DETAILED REVENUE ANALYSIS Table 5: TOTAL EXCHEQUER ISSUES 2021-2022 Revenue Item Annual Budgeted Total Receipt Percentage Equitable share 7,567,354,061 6,961,965,735 92 Opening Balance 265,660,321 265,660,321 100 GRANTS CA-Fuel levy fund 221,681,742 221,681,742 100 Agriculture Sector Support Program II 23,499,950 - 0 DANIDA 15,637,875 41,990,166 262 Kenya Devolution Support Program - Level 2 - 156,635,628 - Kenya Devolution Support Program - Level 1 - 45,000,000 - Transforming Health Systems for Universal Care Project (World Bank-IDA) 18,129,227 - 0 World Bank - Kenya Informal Settlement Improvement Project (KISIP) 300,000,000 - 0 Water & Sanitation Development Program – World Bank Fund 800,000,000 - 0 Total Grants 1,378,948,794 465,307,533 33.7 Total Exchequer Issues 8,946,302,855 7,692,933,589 85.9 Table 6: TOTAL LOCAL REVENUE COLLECTED 2021-2022 FY 2021-2022 Kshs RECEIPTS Other Property Income-Rates 818,647,301 Receipts from Administrative Fees and Charges 559,373,784 Business Permits / Cess 498,723,726 Plot Rents 4,980,998 Market/Trade Centre fees 19,107,207 Vehicle Parking Fees 538,838,877 Housing 25,031,115 Environment and Conservancy Administration 111,534,780 Education Related Fees 118,000 Other Health and Sanitation Revenues 1,042,371,975 Fines Penalties and Forfeitures 904,790 TOTAL 3,619,632,553 Mombasa County Budget Review and Outlook Paper 2022 19 ACTUAL LOCAL REVENUE/ EQUITABLE SHARE ANALYSIS 2018/2019-2021/2022 FYS 10,000.0 8,000.0 6,000.0 4,000.0 2,000.0 - Own Source Revenue (Millions) Exchequer Issues (Millions) 2018/19 2019/20 2020/21 2021/22 Table 7: LOCAL REVENUE ANALYSIS DETAILED 2021/2022 REVENUE. ANNUAL GRAND TOTALS % Collection BUDGETED 2021-2022 KSHS. 2021-2022 KSHS. Land Rates Current Year 236,073,370 Land Rates Penalties 10,706,639 110,265 1% Land Rates Other Years 951,242,723 58,152,947 6% Other Property Charges 0 523,350,000 Ground Rent Other Years 0 941,969 Administration Cost 1,376,131 18,750 1% Other Property Income 963,325,492 818,647,301.00 85% COUNTY ASSEMBLY Document Search Fee 203,472 22,000.00 11% Sales of County's Minutes / Bylaws 914 2,000.00 219% 204,386 22,000.00 Valuation & Survey Fees 42,492,786 - 0% Ground Rent current Year 0 8,392,819.00 Plot Transfer Fee 2,147,884 20,400.00 1% Consent to Sub Lease 541,557 - 0% Technical Division 52,593 10,000.00 19% Beacon Search pointing Fee 105,842 43,000.00 41% Survey Fee 2,808,845 18,750.00 1% Subdivision & Consolidation Fees 22,083,901 65,000.00 0% Mombasa County Budget Review and Outlook Paper 2022 20 REVENUE. ANNUAL GRAND TOTALS % Collection BUDGETED 2021-2022 KSHS. 2021-2022 KSHS. Change of User 6,703,317 - 0% Temporary Occupation License (TOL) 0 50,000.00 Impounding charges 75,436 - 0% Dog Licenses 39,287 - 0% Storage Fee 348,561 - 0% Training/Learning Center Fee 0 - Debts Clearance Certificate Fee 13,705 - 0% Refund of Over Payment 446,517 166,149.00 37% Other Property Charges 5,867,749 456,000.00 8% Sand, Gravel, and Ballast Extraction Fees 829,018,029 350,233,760.00 42% Incidental Charges 34,719 379,123.00 1092% Tender Documents Sale 1,472,802 - 0% Hotel Levy 38,868,296 26,704,830.00 69% Stadium Hire 5,211,009 - 0% Social Hall Hire 8,754,495 2,183,300.00 25% Hire of County Grounds 356,327 93,000.00 26% Sewer Connection Charge 4,568 - 0% County Vehicles Hire 339,840 - 0% Fire Inspection Fees 15,713,114 - 0% Fire-Fighting Services 98,563,589 5,378,000.00 5% Land Scape Scheme 32,834,639 - 0% Buildings Plan Preparation Fee 1,568,233 3,032,825.00 193% Buildings Plan Approval Fee 125,064,218 161,774,828.00 129% Demolition of Structures 773,413 348,000.00 45% Receipts from Administrative Fees and Charges 1,242,509,659 559,373,784.00 45% Business Permits, Current Year 590,950,017 492,117,503.00 83% Business Permits, Other Years (Including Penalties) 1,520,123 6,606,223.00 435% Business Permits / Cess 592,470,140 498,723,726 84% Plot Transfer Fee 17,360 13,600.00 78% Document Search Fee 3,829 7,000.00 183% Allottees Documents 33,764 - 0% Instalment Fee (HDD Scheme) 140,525 37,790.00 27% Annual Ground Rent (HDD Scheme) 2,933,126 2,349,504.00 80% Plots Charges (HDD Scheme) 16,206,075 2,573,104.00 16% Survey Fee 23,933 - 0% Plot Rents 19,358,612 4,980,998 26% Mombasa County Budget Review and Outlook Paper 2022 21 REVENUE. ANNUAL GRAND TOTALS % Collection BUDGETED 2021-2022 KSHS. 2021-2022 KSHS. 03020205 Mackinnon Market Market Stalls Rent 3,021,961 - 0% Market Stalls Rent 1,586,352 - 0% 03020405 Mombasa Wholesale market Market Entrance / Gate Fee 422,431,080 1,742,593.00 0.4% Market Stalls Rent(Rental store w/s mkt) 11,330,593 15,362,684.00 136% Off loading 3,136,615 398,880.00 13% Hawking Fee 22,977,126 1,596,300.00 7% 0 1,750.00 03020505 Magongo Market Market Shops Rent 1,091,870 - 0% 03020605 Likoni Open Air Market 0 - Market Stalls Rent 280,962 5,000.00 2% 03020705 Port Tudor, Kongowea & Likoni Market Market Stalls Rent 178,001 - 0% 03020805 Sega Market Market Stalls Rent 1,773,115 - 0% 03020905 Chaani Open Air Market Market Stalls Rent 1,367,491 - 0% 03021005 Mikindani Market Market Stalls Rent 361,140 - 0% 03021105 Mwembe Tayari Market Market Stalls Rent 1,562,806 - 0% 03021205 Kisauni Retail Stall Market Market Stalls Rent 3,938,704 - 0% Collection from Market Establishments 475,037,816 19,107,207 4% Drainage Certificate Charges 88,115 - 0% Road Cutting Application Fees 92,102 166,500.00 181% Other Vehicles Enclosed Park Fees (Cars, lorries, etc) 1,544 4,000.00 259% Street Parking Fee 363,192,468 227,088,647.00 63% Towing Fee. 151,477 - 0% KAPS Parking Fees 0 10,552,800.00 TLB Matatu Levy 232,492,409 190,322,160.00 82% Mombasa County Budget Review and Outlook Paper 2022 22 REVENUE. ANNUAL GRAND TOTALS % Collection BUDGETED 2021-2022 KSHS. 2021-2022 KSHS. Right of Way / WayLeave Fee (KPLN, Telkom, etc) 103,889,789 110,704,770.00 107% Vehicle Parking Fees 699,907,904 538,838,877.00 77% Housing Estates Monthly Rent 29,208,993 25,031,115.00 86% Housing 29,208,993 25,031,115.00 86% Sign Boards & Advertisement Fee 120,664,188 109,254,560.00 91% County Vehicle Hire 159,500 - 0% Horticulture Consultation Fee 39,200 265,800.00 678% Livestock Certificates 521,922 133,630.00 26% Livestock Permits 4,100 300.00 7% Slaughter Licenses 10,000 10,000.00 100% Vaccination( Dogs, Horses, Camels ) 3,000 - 0% Dog Licenses 82,000 113,000.00 138% Cooperative Audit Charges 255,900 99,990.00 39% Cemeteries Charges 424,700 - 0% Garbage Dumping Fee 2,198,000 1,646,000.00 75% Refuse Collection Fee 109,000 11,500.00 11% Environment and Conservancy Administration 124,471,510 111,534,780.00 90% Inspection Schools for Registration 9,559,000 118,000.00 1% Other Education Related Fees 9,559,000 118,000 1% COUNTY HEALTH Sundry Income 230,523,134 - 0% 07021305 Kongowea Health Centre Premises Inspection Fees 547,476,866 1,042,371,975.00 190% 07021905 Public Health Offices Poultry & Meat Inspection 2,300,000 0% Other Health and Sanitation Revenues 780,300,000 1,042,371,975.00 134% COUNTY EXECUTIVE - Court Fines 25,508,795 238,790.00 1% Cash Bail 4,672,187 666,000.00 14% Fines Penalties and Forfeitures 30,180,981 904,790 3% COUNTY OWN REVENUE 4,966,330,107 3,619,632,553.00 73% Mombasa County Budget Review and Outlook Paper 2022 23 REVENUE ANALYSIS FOR 2021/2022 14. The County realized Kshs 3,619,632,553 being 73 percent of the budgeted local revenue of Kshs. 4,966,330,107. The total revenue collected was Kshs 11,312,566,142 being 81 percent of the total budgeted revenue of Kshs. 14,000,000,000 of which Kshs 7,692,933,589 was total exchequer issues of Kshs 465,307,533 transfers from other National Government entities including budgeted grants and donor funding. Equitable National share amounted to Kshs 6,961,965,735 which was 92 percent of the County allocation. 15. There was an increase in own source revenue collection of Ksh 305,099,375which has been on a progressive increase. This positive trend shows that the county is progressively recovering from the grievous effects of the COVID-19 Pandemic. The County realized 3.6B which is 73% of the projected revenue of 5B. 16. The County’s kitty for the Donor and conditional grants funding continues to wither with the county receiving only Kshs 465,307,533 as grants comprising of DANIDA health grant of Kshs. 41,990,166, Road Maintenance Levy Grant of Kshs. 221,681,742, World Bank-KDSP Level I, Kshs. 45,000,000, and World Bank-KDSP Level II, Ksh. 156,635,628. Expenditure 17. Total expenditure amounted to Kshs. 9,620,434,315 against a target of Ksh 14,000,000,000 representing an under spending of Kshs. 4,379,565,685. (Or 31 percent deviation from the revised budget). The shortfall was attributed to lower absorption in both recurrent and development expenditures due to unrealized own source revenues as well as the undisbursed donor grants. 18. The County had a 69% absorption rate which is the lowest is the lowest both in percentage and in absolute figure in budget implementation over a five year period. 19. Recurrent expenditure was 88% amounting 8.4 billion which comprised of personnel emoluments, operations and maintenance. 20. Development expenditure was Kshs 1.2 Billion compared to a target of Kshs 3.9 Billion. This represented an under-spending of approximately Kshs 2.7 Billion (or 69 percent deviation from the approved development expenditure). The underperformance in development expenditure was majorly contributed by unrealized local revenue and lack of disbursement of all the World Bank’s Water and Sanitation Grant. 21. In arriving at the revenues and expenditures above, the cash basis was used and therefore uncollected revenues, commitments and pending bills were excluded. Mombasa County Budget Review and Outlook Paper 2022 24 Overall Balance and Financing 22. Reflecting the above performance in revenue and expenditure, the County had an absorption rate of 69 percent of the overall budget. 23. The County had a fiscal deficit of Kshs. 4.4 Billion to finance which was attributed to unrealized revenues. Implication of 2021/22 fiscal performance on the set financial objectives 24. The performance in the FY 2021/22 has affected the financial objectives set out in the latest CFSP and the Budget for FY 2022/23 in the following ways: 25. The county will continuously look into ways of enhancing local revenue collection and achieving greater efficiency in terms of cost savings in recurrent expenditure to ensure priority is given to the development projects. 26. Maintaining a lean workforce through halting of new recruitment unless for the key cadre of staff will assist in checking the wage bill. This will create fiscal space for spending on the key county priorities especially in the social sectors and other development programmes. This will further provide adequate room for future countercyclical fiscal policy in the event of a shock. 27. Fiscal consolidation while ensuring that county resources are adequate to promote growth. The County Government is committed to a reduction in the recurrent expenditure to devote more resources to development. At least thirty percent of the total county revenue shall be used in the implementation of development projects. 28. In addition, the county will continue venturing in public private partnerships with potential local and foreign investors and other development partners to assist in development of the county. 29. While we expect the economy to remain resilient, our projections remain cautious. We expect the revenue growth to be on an upward trend in 2022/23 henceforth from all the revenue streams. 30. Notably is the fact that Departments have been taking measures to ensure that they prioritize projects and programs that they are able to implement in the short term which has increased the overall Departmental absorption rate and this trend should be maintained if not improved further. 31. The county Government is in a transition period and thus will be keen in laying out strategies that will improve our fiscal space without negating on the gains that have been realized so far. Mombasa County Budget Review and Outlook Paper 2022 25 Table 8 and 9 provides comparison between the updated Revenue Projections for the FY 2022/23- 2023/24 and in the medium term. Revenue Stream Budgeted 2022/23 Projected 2023/24 Projected 2024/25 Road maintenance fees 201,914,493 55,010,218 57,760,729 Advertisement income 120,664,188 80,997,397 85,047,267 Parking fees 379,006,857 412,537,360 433,164,228 Fire brigade & ambulance fees 94,572,460 69,755,025 73,242,776 Total 796,157,998 618,300,000 649,215,000 Plot rent & related charges 20,326,543 21,342,870 19,358,612 Development control income 76,023,563 79,824,741 81,927,203 Structural Submission/Approval Fees 31,580,324 33,159,340 110,000,000 Land rates and related fees 955,943,300 913,151,965 932,777,973 Housing Estates Monthly Rent 32,815,535 34,456,312 29,208,993 Valuation & Survey Fees 35,310,735 37,076,272 40,772,128 Total 1,214,044,909 1,152,000,000 1,119,011,500 Stadium & Other Playing Fields 5,250,000 5,512,500 5,000,000 Social halls hire 8,820,000 9,261,000 8,400,000 Total 13,400,000 14,070,000 14,773,500 Legal department fees 1,579,968 1,658,966 1,504,731 General enforcement charges 5,911,654 6,207,237 5,630,146 Court Fines 30,180,981 22,508,378 23,633,797 Total 37,315,859 30,000,000 31,500,000 Hotel Levy 37,294,404 13,959,124 14,657,080 Sand, Gravel, and Ballast Extraction Fees 715,448,650 643,527,779 675,704,168 Market collection 495,396,815 304,802,634 320,042,766 Business permit fees 537,710,463 564,595,986 524,619,910 Total 1,772,759,779 1,500,000,000 1,575,000,000 Registration of Child Care Facilities 9,559,000 11,000,000 11,550,000 Total 9,559,000 11,000,000 11,550,000 Meat Inspection/Permit 3,100,000 2,205,000 2,300,000 Mombasa County Budget Review and Outlook Paper 2022 26 Revenue Stream Budgeted 2022/23 Projected 2023/24 Projected 2024/25 Boat Operations 3,700,000 4,570,000 3,745,000 Total 6,000,000 7,670,000 5,950,000 Tender Documents Sale 1,413,164 5,817,209 1,558,013 Financial related income 5,850,277 11,142,791 6,441,987 Total 7,263,441 16,960,000 8,000,000 Clinic cost sharing charges & Other services 958,000,000 1,000,000,000 1,035,000,000 Total 958,000,000 1,000,000,000 1,035,000,000 Total Local Revenue 4,814,500,985 4,350,000,000 4,450,000,000 Table 10: Updated Departmental Ceilings against CFSP' 20 Projections, 2021/22-2023/24 S/NO DEPARTMENTS Approved Budget FY Final Budget FY Budgeted 2022/23 Projected 2023/2024 2021/2022 2021/2022 3011 The Executive 356,491,789 213,928,018 360,000,000 360,000,000 3012 County Assembly 779,254,392 679,254,392 859,000,000 659,000,000 3013 Public Service Board 130,000,000 75,257,533 130,000,000 130,000,000 3014 Finance and Economic Planning 634,128,550 1,291,633,692 594,484,000 910,000,000 3015 Energy, Environment and Waste Management 612,000,000 582,592,293 615,000,000 615,000,000 3016 Education & Information Technology 596,000,000 292,510,043 627,516,000 646,000,000 3017 Health Services 3,271,787,854 2,647,848,919 3,255,000,000 3,400,000,000 3018 Water, Environment and Natural Resources 130,000,000 38,133,595 130,000,000 130,000,000 3019 Youth, Gender, Sports and Cultural Affairs 400,000,000 269,639,144 260,000,000 300,000,000 3020 Trade, Tourism and Investments 445,160,775 448,948,898 450,000,000 350,000,000 3021 Land, Planning, Housing and Urban Renewal 273,000,000 244,163,962 270,000,000 270,000,000 3022 Transport, Infrastructure and Public Works 510,000,000 367,080,838 594,000,000 560,000,000 3023 Agriculture, Fisheries, Livestock and Co-Operatives 273,499,950 159,789,666 235,000,000 250,000,000 3026 Devolution and Public Service Administration 906,176,640 2,804,841,515 920,000,000 920,000,000 REC Total 9,317,499,950 10,115,622,508 9,300,000,000 9,500,000,000 Mombasa County Budget Review and Outlook Paper 2022 27 S/NO DEPARTMENTS Approved Budget FY 2021/2022 Final Budget FY 2021/2022 Budgeted 2022/23 Projected 2023/2024 3011 County Executive 30,000,000 1,960,000 25,000,000 25,000,000 3012 County Assembly 200,000,000 200,000,000 30,000,000 30,000,000 3013 Public Service Board 20,000,000 1,890,000 20,000,000 20,000,000 3014 Finance & Economic Planning 326,500,050 233,974,435 300,000,000 350,000,000 3015 Energy, Environment & Waste Management 305,000,000 170,198,863 430,000,000 305,000,000 3016 Education & Information Technology 431,000,000 109,611,587 300,000,000 300,000,000 3017 Health Services 370,000,000 403,093,395 149,000,000 320,000,000 3018 Water, Sanitation & Natural Resources 1,100,000,000 800,500,000 1,000,000,000 1,200,000,000 3019 Youth, Gender, Sports and Cultural Affairs 500,000,000 237,182,301 500,000,000 500,000,000 3020 Trade, Tourism & Investment 400,000,000 9,999,678 380,000,000 380,000,000 3021 Land, Planning, Housing and Urban Renewal 480,000,000 421,726,867 400,000,000 180,000,000 3022 Transport, Infrastructure and Public Works 680,000,000 1,228,792,159 526,000,000 750,000,000 3023 Agriculture, Fisheries, Livestock and Co-operatives 230,000,000 48,434,715 250,000,000 250,000,000 3026 Devolution & Public Service Administration 110,000,000 17,013,494 90,000,000 90,000,000 Dev TOTAL 5,182,500,050 3,884,377,492 4,400,000,000 4,700,000,000 DEPARTMENTS Approved Budget FY 2021/2022 Final Budget FY 2021/2022 Budgeted 2022/23 Projected 2023/2024 3011 The Executive 386,491,789 215,888,018 385,000,000 385,000,000 3012 County Assembly 979,254,392 879,254,392 889,000,000 689,000,000 3013 Public Service Board 150,000,000 77,147,533 150,000,000 150,000,000 3014 Finance & Economic Planning 960,628,600 1,525,608,127 894,484,000 1,260,000,000 3015 Energy, Environment & Waste Management 917,000,000 752,791,156 1,045,000,000 920,000,000 3016 Education & Information Technology 1,027,000,000 402,121,630 927,516,000 946,000,000 3017 Health Services 3,641,787,854 3,050,942,314 3,404,000,000 3,720,000,000 3018 Water, Sanitation & Natural Resources 1,230,000,000 838,633,595 1,130,000,000 1,330,000,000 3019 Youth, Gender, Sports and Cultural Affairs 900,000,000 506,821,445 760,000,000 800,000,000 3020 Trade, Tourism & Investment 845,160,775 458,948,576 830,000,000 730,000,000 3021 Land, Planning, Housing and Urban Renewal 753,000,000 665,890,829 670,000,000 450,000,000 3022 Transport, Infrastructure and Public Works 1,190,000,000 1,595,872,997 1,120,000,000 1,310,000,000 3023 Agriculture, Fisheries, Livestock and Co-operatives 503,499,950 208,224,381 485,000,000 500,000,000 3026 Devolution and Public Service Administration 1,016,176,640 2,821,855,009 1,010,000,000 1,010,000,000 Grand TOTAL 14,500,000,000 14,000,000,000 13,700,000,000 14,200,000,000 Mombasa County Budget Review and Outlook Paper 2022 28 Updated Expenditure Projections against CFSP' 21 Projections, 2021/22- 2023/24 32. Given the above deviations, the revision in revenues and expenditures will be based on the revised assumptions contained in this CBROP and which will be firmed up in the context of the next CFSP. The CG will not deviate from the fiscal responsibility principles, but will make appropriate modification to the CFSP 2023, the financial objectives contained in the latest CFSP, to reflect the changed circumstances. 33. The County Government has upgraded its automated revenue collection systems in most sources to reduce leakages, improved efficiency and effectiveness and thus increase revenue collection. In addition, we also envisage stability in interest rates and exchange rates as a result of the National Government policies to promote access to credit for private sector and boost investments and consumption thus stimulating the County’s economic growth. 34. Additional risks could emanate from public spending pressures especially on the recurrent expenditures including adoption of the proposed CBA that will lead to an increase in the personnel emolument budget. 35. The fiscal framework for the financial year 2023/24 entails a deliberate effort to continue exercising prudence in public expenditure management with the principal goal of containing fiscal risks, gradually lowering the fiscal deficit, and adopting austerity measures to deter increase of recurrent expenditures in favor of productive capital spending. 36. To achieve this, the Government endeavors to prioritize expenditure in provision of safe potable water, quality health services, modernized education institutions, improved infrastructure, sanitation and waste management, social protection as well as youth and gender empowerment. The overall objective of this is to realize sustainable, shared and equitable growth that would in return lead to accelerated job creation and improved livelihoods for the citizenry. Mombasa County Budget Review and Outlook Paper 2022 29 V. RECENT ECONOMIC DEVELOPMENTS AND OUTLOOK A. Recent Economic Developments Global Economic Performance 37. The 2022 Budget Review and Outlook Paper (BROP) has been prepared against a background of economic slowdown occasioned by the ongoing Russia-Ukraine conflict, effects of the COVID- 19 containment measures, higher-than expected inflation worldwide triggered by higher global oil and food prices and the impact of the global monetary policy that has created tighter financial condition. As a result, the global economy is projected to slow down to 3.2 percent in 2022 from 6.1 percent 2021. 38. Advanced economies are projected to slow down to 2.5 percent in 2022 from 5.2 percent in 2021 reflecting weaker-than-expected growth in the United States and the Euro area. Growth in the United States slowed down due to significantly less momentum in private consumption while the slowdown in growth in the euro area reflected spill overs from the war in Ukraine as well as the assumption of tighter financial conditions. For emerging market and developing economies, growth is also projected to slow down to 3.6 percent in 2022 from 6.8 percent in 2021 reflecting mainly the sharp slowdown of China’s economy and the moderation in India’s economic growth. 39. In sub-Saharan Africa region, growth is projected to slow down by 3.8 percent in 2022 from a growth of 4.6 percent in 2021. The slowdown is as a result of domestic price pressures, partly induced by supply disruptions owing to the war in Ukraine reducing food affordability, and real incomes as well as surging fuel prices across the region. Domestic Economic Performance GDP Growth 40. The Kenyan economy demonstrated remarkable resilience and recovery to the COVID-19 shock due to the diversified nature of the economy and the proactive measures by the Government to support businesses. The economy expanded by 7.5 percent in 2021, a much stronger level from a contraction of 0.3 percent in 2020. This economic recovery was mainly supported by the recovery in the service and industry sectors despite the subdued performance in the agricultural sector. 41. In the first quarter of 2022, the economy expanded further by a remarkable 6.8 percent compared with a growth of 2.7 percent in a similar quarter in 2021. The strong performance was supported by continued recovery in manufacturing, transport and storage, accommodation Mombasa County Budget Review and Outlook Paper 2022 30 and food services, wholesale and retail trade, Professional, administration and support services and financial and insurance. 42. The recovery of activities in the services sector continued in the first quarter of 2022. The sector grew by 9.1 percent in the first quarter of 2022 compared to a growth of 3.2 percent in the same quarter in 2021. The strong growth was largely characterized by significant recovery in transportation and Storage (8.1 percent), accommodation and food services (56.2 percent) and Professional, Administrative and Support Services (14.9 percent). The sector was also supported by strong growths financial and insurance services (14.4 percent), and wholesale and retail trade (8.7 percent). The services sector contributed 5.1 percentage point to real GDP growth in the first quarter of 2022 compared to the 1.8 percentage point contribution in the same quarter in 2021. Domestic Employments 43. Relaxation of various containment measures, such as the night curfew, lockdowns and travel restrictions coupled with the rollout of COVID-19 vaccination had a positive impact on economic activities. This provided an environment that spurred economic recovery and growth in 2021. There was a general decline in unemployment and inactivity levels, with total employment surpassing the pre-pandemic level. Total new jobs created in the economy were 926.1 thousand of which 172.3 thousand were in the formal sector, while 753.8 thousand were in the informal sector. 44. Wage employment in the formal sector recorded a growth of 6.0 percent to 2.9 million in 2021 and created a total of 172.3 thousand jobs. This was supported by a partial resumption of international travel, and a broad-based recovery in the manufacturing sector. The number of self-employed and unpaid family workers engaged in the formal sector increased by 4.9 percent in 2021 compared to a decline of 4.1 percent recorded in 2020. The informal sector created 753.8 thousand jobs accounting for 81.4 percent of the total jobs created outside of small-scale agriculture and pastoralist activities. Inflation Rate 45. The year-on-year inflation rate increased to 8.5 percent in August 2022 (above the 7.5 percent upper bound) from 6.6 percent in August 2021 mainly due to higher food and fuel prices. This increase was moderated by Government measures to stabilize fuel prices, lower electricity tariffs and subsidies on fertilizer prices. Additionally, the waiver of import duties and levies on white maize and the reduction in VAT on LPG will further moderate domestic prices. Overall annual average inflation remained within Government target range at 6.6 percent in August 2022 compared to the 5.7 percent recorded in August 2021. Mombasa County Budget Review and Outlook Paper 2022 31 46. Food inflation remain the main driver of overall year-on-year inflation in August 2022, contributing 5.9 percentage points, an increase, compared to a contribution of 3.9 percentage points in August 2021. The increase was mainly attributed to dry weather conditions and supply constraints that resulted in a rise in prices of key food items particularly maize flour (loose), sugar, maize grain (loose), carrots, white rice, Irish potatoes and onions. 47. Fuel inflation remained generally stable contributing to 1.6 percentage points to year-on year overall inflation in August 2022 from a contribution of 1.5 percentage points in August 2021. This was mainly due to the effect of Government measures to stabilize fuel prices and lower electricity tariffs. However, there was notable increase in the prices of kerosene/paraffin, petrol and diesel in August 2022 compared to August 2021. 48. The contribution of core inflation to year-on-year overall inflation has been low and stable, consistent with the muted demand pressures in the economy on account of prudent monetary policies. The contribution of core inflation to overall inflation remained stable at 1.0 percentage points in August 2022 compared to 0.9 percentage point’s contribution in August 2021. 49. Kenya’s rate of inflation compares favourably with the rest of Sub-Saharan Africa countries. In August 2022, Kenya recorded a lower inflation rate than Ghana, Rwanda, Nigeria, Burundi, Zambia and Uganda. Kenya Shilling Exchange Rate 50. The foreign exchange market has largely remained stable despite the tight global financial conditions and the high demand for the US Dollar in the international market. The Kenya Shilling to the US Dollar exchanged at Ksh 119.4 in August 2022 compared to Ksh 109.2 in August 2021. Over the same period, the Kenyan Shilling strengthened against other major international currencies. The Euro exchanged at Ksh 121.0 in August 2022 compared to Ksh. 128.6 in August 2021 while the Sterling Pound exchanged at Ksh 143.5 compared to Ksh 150.9 over the same period. 51. In comparison to most Sub-Saharan Africa currencies, the Kenya Shilling has remained relatively stable weakening by 9.3 percent against the US Dollar in the year to August 2022. The depreciation rate of the Kenya Shilling was lower than that of Namibian Dollar, Botswana pula, South African Rand and Malawi Kwacha. The stability in the Kenya Shilling was supported by increased remittances, adequate foreign exchange reserves and improved exports. Mombasa County Budget Review and Outlook Paper 2022 32 B. Medium Term Economic Outlook Global Growth Outlook 52. The global economic outlook remains highly uncertain with growth projected to moderate to 2.9 percent in 2023 from 3.2 percent in 2022 largely reflecting a slowdown in advanced economies despite a gradual pick up in the emerging market and developing economies. Advanced economies are projected to slow down by 1.0 percent in 2023 from 2.3 percent in 2022 mainly due to a slowdown in growth in the United States and the Euro area. Growth in the United States is projected to slow down due to the expected impact of a steeper tightening in monetary policy. Growth in the euro area is expected to be adversely affected by the spill overs from the war in Ukraine as well as the assumption of tighter financial conditions. 53. The emerging market and developing economies are projected to pick up to a growth of 3.9 percent in 2023 from a growth of 3.6 percent in 2022 albeit with varying performance across countries. The emerging and developing Asia is projected to pick up as a result of a more robust recovery in china despite a slowdown in India, while growth in the Latin America and the Caribbean and the Middle East and Central Asia are expected to slow down. 54. The Sub-Saharan African region is projected to pick up to a growth of 4.0 percent in 2023 from 3.8 percent in 2022 with the East and Southern African sub-region showing a sustained recovery from the recession. The DRC and Zambia are expected to benefit from rising metal prices in the short-and medium term and gain from the transition away from fossil fuels in the long term. Domestic Growth Outlook 55. Domestically, leading indicators of economic activity show continued strong performance in the second quarter of 2022, supported by strong activity in transport and storage, wholesale and retail trade, construction, information and communication, and accommodation and food services. As such, the economy is expected to remain robust at 5.5 percent in 2022, with continued strong performance of the services sector despite the downside risks to global growth. 56. Growth is expected to remain resilient growing by 5.8 percent in FY 2022/23 and averaging 6.2 percent over the medium term. This will be supported by a broad-based private sector growth, including recoveries in agriculture while the public sector consolidates. This outlook will be reinforced by the ongoing implementation of the strategic priorities of the Government under the “Big Four” Agenda and the Economic Recovery Strategy. 57. Additionally, the Government is implementing the third phase of the Economic Stimulus Programs that target strategic interventions in agriculture, health, education, drought response, policy, infrastructure, financial inclusion, energy, and environmental conservation. The Mombasa County Budget Review and Outlook Paper 2022 33 economic growth projections over the medium term are aligned to those of the Third Medium Term Plan (2018-2022) of the Vision 2030. Monetary Policy Outlook 58. The main objective of monetary policy, over the medium term will be to maintain price stability. Overall inflation is expected to moderate to 6.0 percent in FY 2022/23 and remain within the target range of 5±2.5 percent as international commodity prices, particularly oil, wheat and edible oils, have begun to moderate. Additionally, the waiver of import duties and levies on white maize and the reduction in VAT on LPG will further moderate domestic prices. 59. The foreign exchange market is expected to remain stable supported by, resilient export receipts, buoyant remittances, and a gradual pick up in receipts from services exports. The continued coordination of monetary and fiscal policies is expected to sustain macroeconomic stability and support economic activity. Fiscal Policy Outlook 60. The Fiscal policy over the medium-term aims at enhancing revenue mobilization, expenditure rationalization and strengthening management of public debt to minimize cost and risks of the portfolio, while accessing external concessional funding to finance development projects. This is geared towards economic recovery to support sustained, rapid and inclusive economic growth, safeguard livelihoods and continue the fiscal consolidation programme to create fiscal space for the implementation of the “Big Four” Agenda. Recent Economic Developments in the County 61. Growth in the local revenue remained resilient during the first three quarters with the highest collection being in the third quarter, however the collection dipped in the fourth quarter. In terms of the development agenda in the 2021/22 FY, most of the projects could not be undertaken due to the cash crunch thus have been reprioritized in the next FY and beyond. 62. As the county diversifies its economic activities and positions its self to becoming a preferred destination for investors both local and foreign so as to improve the quality of life for its citizens, it will establish onsite infrastructure. This is will stimulate the ailing economy by providing an enabling environment for investment and delivery of services by acting as a catalyst that ensures amongst others a vibrant 24 hours economy and also a preferred worldwide tourist destination. 63. In infrastructure development, the main interventions will be improvement of access roads, drainage, non-motorized transport, beautification and aesthesis of the County. To empower the SMES the county will continue to improve and set up trading infrastructure within the county. 64. On the exploitation of the Blue Economy; the main economic activities driving the Gross County Product (GCP) in Mombasa County are Transport and Storage (27.0 per cent) and Manufacturing Mombasa County Budget Review and Outlook Paper 2022 34 (14.0 per cent). The National Spatial Plan 2015-2045 identifies Mombasa as a key coastal urban centres that serves as a Port City and Gateway to East Africa. The Sea Port of Mombasa provides direct connectivity to over 80 Ports worldwide and is linked to a vast hinterland comprising countries in East Africa. 65. The County Government has plans for; Establishment of Model Farms, Construction of Mari culture Farms, continuous procurement of fishing gears and boat accessories, Create an integrated value addition Centre with both agriculture and fisheries components, Construction of a 110-tonne capacity cold storage as well as Branding of the 001 products. 66. In addition to the above measures, the Government will continue to support the development of the onsite infrastructure for the industrial parks, Export Processing Zones (EPZs), Special Economic Zones (SEZs) and industrial parks across the country. More specifically the establishment of the Dongo Kundu SEZs and infrastructures. 67. The Covid -19 pandemic was a wakeup call for Governments to ensure that health services are given outmost priority. In this regard, the County Government of Mombasa strives to achieve Universal Health care and will endeavor to ensure that its citizens have access to the best possible affordable and quality health services by heavily investing in the sector. 68. The projected water demand for the County is 186,000 cubic meters per day while the current supply is at 42,000 cubic meters. The available supply can only meet about 25% of the demand and thus there is need for concerted efforts to address the water deficit. The establishment of desalination plants that will address the shortfall has been prioritized within the county development plans. A large population relies on borehole water that contains a high percentage of fecal contamination and not safe for domestic use. 69. The County Government’s process of the total rehabilitation of the CBD and all public beaches which will give the tourism sector a major boost and see Mombasa reclaiming its glory as a major tourism destination both locally and internationally has been on course. 70. As we continue to revamp and expand the economic activities within the county so as to create employment and self-sustainability for the citizens the county has already embarked on the process of rehabilitating and construction of markets and trading areas within the County. Mombasa County Budget Review and Outlook Paper 2022 35 Table 11: MONTHLY GRAPHICAL COMPARISON FOR LOCAL & EXCHEQUER ISSUES FOR THE FY 2017/18-2021/22 Month LOCAL & LOCAL & LOCAL & LOCAL & LOCAL & EXCHEQUER ISSUES EXCHEQUER ISSUES EXCHEQUER EXCHEQUER EXCHEQUER 2017-2018 2018-2019 ISSUES 2019- ISSUES 2020- ISSUES 2021- 2020 2021 2022 July 727,185,165 91,417,758 110,950,638 133,177,640 290,898,301 August 79,711,499 562,615,570 164,871,323 180,063,924 763,683,092 September 572,345,325 663,072,153 1,423,722,979 207,752,314 967,834,543 October 91,899,794 936,242,786 824,649,783 1,365,540,619 883,913,934 November 1,087,104,176 1,023,383,274 208,065,464 1,023,223,263 1,410,259,303 December 931,140,740 1,185,508,365 1,052,784,432 737,461,308 826,311,283 January 1,084,667,063 1,378,881,746 1,235,881,938 1,240,116,309 1,142,223,950 February 885,758,696 1,217,633,592 2,014,214,307 1,044,554,398 1,122,860,912 March 1,664,468,592 733,336,511 1,199,399,565 1,141,508,952 1,121,314,725 April 519,256,970 1,983,347,865 243,403,040 880,176,898 971,630,654 May 1,160,397,863 257,793,200 901,902,540 786,713,182 781,531,785 June 3,226,497,419 2,855,212,810 2,026,400,543 2,636,959,134 299,135,806 12,030,433,302 12,888,445,630 11,406,246,551 11,377,247,941 10,581,598,288 Analysis of Total Local & Exchequer Issues 2017/18 - 2021/22 14,000,000,000 12,000,000,000 10,000,000,000 8,000,000,000 6,000,000,000 4,000,000,000 2,000,000,000 0 LOCAL & EXCHEQUER ISSUES 2017-2018 LOCAL & EXCHEQUER ISSUES 2018-2019 LOCAL & EXCHEQUER ISSUES 2019-2020 LOCAL & EXCHEQUER ISSUES 2020-2021 LOCAL & EXCHEQUER ISSUES 2021-2022 Mombasa County Budget Review and Outlook Paper 2022 36 Medium Term Fiscal Framework 71. The County Government will continue pursuing prudent fiscal policy to ensure stability. In addition, our fiscal policy objective will provide an avenue to support economic activity while allowing for sustainable management of public finances. As such, the CG will continue honouring the repayment plan of the pending bills so as to offset all the pending bills in the shortest period possible and ensuring expenditure is strictly done guided by availability of funds going forth. 72. Fiscal policy will continue to support County development economic activities while providing a platform for the implementation of the various planned projects and programmes within a context of sustainable public financing. This process will be strengthened in the FY 2023/24 by encouraging more private-sector engagement in order to build concrete public private Partnership in pursuit of new economic opportunities. 73. The growth of the outlook for the calendar year 2022 and the FY 2022/23 and the medium term, will be supported by the stable macroeconomic environment, ongoing investments in strategic priorities of the County Government under the Vision 2035 to compliment the “Big Four” Agenda, the ongoing public investments in infrastructure projects, the Economic Stimulus Program being implemented and the planned Post Covid-19 Economic Recovery Strategy, turn around in trade as economies recover from the Pandemic. 74. The County Government in developing the third generation CIDP 2023-2028 will ensure that it rides on the gains that has so far been realized while also putting up strategic measures to address the challenges that have so far been identified that are hindering effective service delivery to the citizenry. 75. With respect to revenue, the CG will maintain a strong revenue effort at 10 percent of Revenue Growth over the medium term. Measures to achieve this effort include upgrading of the county revenue automated systems, interdepartmental concerted efforts towards revenue collection, implementation of the finance act 2022 with a rejuvenated enforcement mechanism. In addition, the CG will rationalize existing fees and charges incentives, expand the income base and remove exemptions as envisaged in the Constitution. 76. On the expenditure side, the CG will continue with rationalization of expenditure to improve efficiency and reduce wastage. Expenditure management will be strengthened with continued implementation of the Integrated Financial Management Information System (IFMIS) across all the departments. 77. The county will continue redirecting expenditure towards those priority programmes as identified in public consultative forums. The critical programmes to be implemented are expected to accelerate economic activities and socio-economic welfare. Mombasa County Budget Review and Outlook Paper 2022 37 Risks to the Outlook 78. There are down side risks to this macroeconomic outlook emanating from domestic as well as external sources. On the domestic front, the emergence of new Omicron COVID-19 variants may occasion restrictive measures. Other risks relate to lower agricultural output due to potential adverse weather conditions. Additionally, increased public expenditure pressures, particularly wage and other recurrent expenditures, would put a strain to the fiscal space. 79. On the external front, the key downside risks include: uncertainty about the global outlook, reflecting adverse effects of the war in Ukraine, inflationary risks (from rising prices of food and oil), continuing COVID-19 pandemic related disruptions, and supply chain constraints as well as increased global financial markets volatility amid the tightening of monetary policy in advanced economies. 80. The Government has faced difficult policy trade-offs to secure economic recovery and navigate existing macroeconomic challenges amidst diminishing fiscal space. Among the fiscal measures implemented by Government to minimize the adverse impact of these emerging issues to the Kenyan economy include, among others:  Subsidizing pump prices through the Petroleum Development Levy Fund;  Reduction in electricity tariff by 15 percent to lower cost of power;  Granting waiver of import duty on 540,000 metric tonnes of white non-genetically modified (non-GMO) imported into the country; and waived for a period of 3 months, the Railway Development Levy and the Import Declaration Fee on the importation of the gazetted white maize;  Implemented Fertilizer Subsidy - to farmers during the April planting season (Ksh 3.0 billion) and a further Ksh 2.7 billion for the next planting season in October 2022;  Reduced the VAT rate on LPG from 16% to 8% in the Finance Act, 2022;  Increased the minimum wage for low earners by 12 percent with effect from 1st May, 2022. 81. The County will embark on the implementation of the Economic Recovery Strategy to return the economy on a stable growth path. Additionally, the diversified nature of our economy continues to offer resilience to any global challenges. 82. Other that the frequent late disbursement of exchequer issues, the main challenges that continue to be experienced relate to unrealized projected local revenue collection, bloated wage bill and huge pending bills some of which are statutory deductions that accrue huge interests. 83. The high wage bill continues to be a major challenge in the implementation of the budget. Currently in the 2022/23 financial year the personnel emoluments stand at 42% of the overall county budget which is 7% above the statutory requirement of 35%. The recruitment of key essential staff and the frequent salary increment for various cadres of staff continues to increase the already bloated wage Mombasa County Budget Review and Outlook Paper 2022 38 bill. The various collective bargaining agreements (CBAs) to increase salaries and benefits of various officers also continues to threaten the already ballooned wage bill. 84. Non timely disbursement of funds by the national government especially in the fourth quarter and continues to be a challenge as this leads to delay in execution of planned activities of the County thus compromising service delivery. 85. In the medium term, due to revenue shortfalls, the ever-increasing pending bills and a high wage bill, continues to pose a threat of a budget deficit. Systems are being put in place to improve local revenue performance, following revenue collection reforms and moderation in recurrent expenditure, so as to increase the revenue bases and the fiscal position in the medium term. 86. The fiscal framework for the financial year 2023/24 will entail a deliberate effort to continue exercising prudence in public expenditure management with the principal goal of containing fiscal risks, gradually lowering the fiscal deficit, and adopting austerity measures to deter increase of recurrent expenditures in favor of productive capital spending. To achieve this, the Government endeavors to prioritize expenditure in provision of safe potable water, quality health services, modernized education institutions, improved infrastructure, sanitation and waste management, social protection as well as youth and gender empowerment. The overall objective of this is to realize sustainable, shared and equitable growth that would in return lead to accelerated job creation and improved standards of living for the citizenry. 87. The CG recognizes that further stringent measures need to be put in place to ensure scaling up of revenue collection and mobilization of resources and more efficient production structure. The CIDP 2018-22 which is in its final stretch has articulated key priority measures to accelerate growth, taking into account limited public resources and increased service delivery for improved livelihoods and this will be transited in the next generation CIDP 2023/2028 . 88. The Government will monitor the above risks and take appropriate measures to safeguard macroeconomic stability including preparation of supplementary budgets to regularize and align any emerging issues. Mombasa County Budget Review and Outlook Paper 2022 39 VI. RESOURCE ALLOCATION FRAMEWORK A. Adjustment to 2022/23 Budget 89. Given dismal performance in 2021/22 and the updated fiscal outlook, the risks to the FY 2022/23 budget include lack of realization of the projected local revenue which will hinder the full implementation of the budget. Expenditure pressures with respect to increased personnel emoluments. 90. In addition, implementation pace in the spending units continues to be a source of concern especially with regard to the development expenditures and uptake of external resources. These risks will be monitored closely and the CG would take appropriate measures in the context of the Supplementary Budget. 91. Adjustments to the 2022/23 budget will take into account actual performance of expenditure so far and absorption capacity in the remainder of the financial year because of the resource constrains, the Government will rationalize expenditures by cutting those that are non-priority. These may include slowing down or reprioritizing development expenditures and increased budgeting for debt resolution. 92. Any review of salaries and benefits for the personnel continues to be conducted by the Salaries and Remunerations Commission (SRC) in accordance with Article 230 of the Constitution and Regulations. 93. On the Revenue side, the County Treasury continues to institute corrective measures to curb the revenue leakages by enhancing compliance and updating of the revenue automation system. 94. Departments are expected to prioritize their expenditure and reallocate funds guided by the priorities during the preparation of the supplementary budget guided by the resource availability. B. Medium-Term Expenditure Framework 95. Progressively, and in view of the limited resources, MTEF budgeting will entail adjusting non- priority expenditures to cater for the priority sectors. In the Meantime, the resource allocation will be based on the Annual Development Plan and the Fiscal Strategy Paper. 96. The priority social sectors will continue to receive adequate resources in the budget and are required to utilize the allocated resources more efficiently to generate fiscal space to accommodate other strategic interventions in their sectors. 97. In this regard, the County Government in the meantime continues to take decisive steps to harness the implementation of various policies and programmes within the key priorities in the CFSP 2022 as it embarks on the development of the CIDP 2023- 2028 as outlined below;  Enhanced health services  Sustainable waste management services  Augment accessibility to safe potable water and sustained food security  Integrated Quality Education, Gender empowerment, Youth & Sports improvement Mombasa County Budget Review and Outlook Paper 2022 40  Affordable Housing Services and Land management  Public and onsite Infrastructure development 98. The fiscal framework for the financial year 2023/24 entails a deliberate effort to continue exercising prudency in public expenditure management with the principal goal of containing fiscal risks, gradually lowering the fiscal deficit, and adopting austerity measures to deter increase of recurrent expenditures in favor of productive capital spending. 99. The fundamental pillar of post-Covid-19 Economic Recovery Strategy (ERS) is a sound macroeconomic framework. The other key pillars include accelerated growth in private sector investment; enhanced allocations to strengthen health care systems; supported recovery and growth of MSMEs; full implementation of the ESP; continue harnessing the blue economy; up-scaled investment in infrastructure; facilitate clean, green and resilient growth and better disaster preparedness and management. In addition, the Government will pay greater attention to economic governance, inequality, social cohesion, gender, youth, regional integration, and international cooperation. 100. There is need for urgent responses for addressing the social and economic effects of the Covid- 19 pandemic in Mombasa County, in order for the County to recover and be on an upward growth trajectory. In this regard, six (6) pillars have been identified:  Boosting private sector activity;  Policy, legislation and institutional reforms;  Strengthening County Government’s preparedness and response to pandemic and disasters;  Enhancing ICT capacity for business continuity,  Human capital development and  Blue Economy. 101. Reflecting the above medium-term expenditure framework, the tables below provide the tentative projected baseline ceilings for the 2023/24 MTEF, classified by Departments. Table 13: Medium Term Sector Ceiling 2021/2022 - 2024/2025, Ksh Million S/NO DEPARTMENTS Approved Budget Final Budget Budgeted Projected Projected 2021/2022 2021/2022 2022/2023 2023/2024 2024/2025 3011 The Executive 356,491,789 213,928,018 360,000,000 360,000,000 367,200,000 3012 County Assembly 779,254,392 679,254,392 859,000,000 659,000,000 672,180,000 3013 Public Service Board 130,000,000 75,257,533 130,000,000 130,000,000 132,600,000 3014 Finance and Economic Planning 634,128,550 1,291,633,692 594,484,000 910,000,000 928,200,000 3015 Energy, Environment and Waste Management 612,000,000 582,592,293 615,000,000 615,000,000 627,300,000 3016 Education & Information Technology 596,000,000 292,510,043 627,516,000 646,000,000 658,920,000 3017 Health 3,271,787,854 2,647,848,919 3,255,000,000 3,400,000,000 3,468,000,000 3018 Water, Environment and Natural Resources 130,000,000 38,133,595 130,000,000 130,000,000 132,600,000 3019 Youth, Gender, Sports and Cultural Affairs 400,000,000 269,639,144 260,000,000 300,000,000 306,000,000 3020 Trade, Tourism and Investments 445,160,775 448,948,898 450,000,000 350,000,000 357,000,000 Mombasa County Budget Review and Outlook Paper 2022 41 3021 Land, Planning, Housing and Urban Renewal 273,000,000 244,163,962 270,000,000 270,000,000 275,400,000 3022 Transport, Infrastructure and Public Works 510,000,000 367,080,838 594,000,000 560,000,000 571,200,000 3023 Agriculture, Fisheries, Livestock and Co-Operatives 273,499,950 159,789,666 235,000,000 250,000,000 255,000,000 3026 Devolution and Public Service Administration 906,176,640 2,804,841,515 920,000,000 920,000,000 938,400,000 REC 9,317,499,950 10,115,622,508 9,300,000,000 9,500,000,000 9,690,000,000 S/NO DEPARTMENTS Approved Budget Final Budget Budgeted Projected Projected 2021/2022 2021/2022 2022/2023 2023/2024 2024/2025 3011 County Executive 30,000,000 1,960,000 25,000,000 25,000,000 25,500,000 3012 County Assembly 200,000,000 200,000,000 30,000,000 30,000,000 30,600,000 3013 Public Service Board 20,000,000 1,890,000 20,000,000 20,000,000 20,400,000 3014 Finance & Economic Planning 326,500,050 233,974,435 300,000,000 350,000,000 357,000,000 3015 Energy, Environment & Waste Management 305,000,000 170,198,863 430,000,000 305,000,000 311,100,000 3016 Education & Information Technology 431,000,000 109,611,587 300,000,000 300,000,000 306,000,000 3017 Health Services 370,000,000 403,093,395 149,000,000 320,000,000 326,400,000 3018 Water, Sanitation & Natural Resources 1,100,000,000 800,500,000 1,000,000,000 1,200,000,000 1,224,000,000 3019 Youth, Gender, Sports and Cultural Affairs 500,000,000 237,182,301 500,000,000 500,000,000 510,000,000 3020 Trade, Tourism & Investment 400,000,000 9,999,678 380,000,000 380,000,000 387,600,000 3021 Land, Planning, Housing and Urban Renewal 480,000,000 421,726,867 400,000,000 180,000,000 183,600,000 3022 Transport, Infrastructure and Public Works 680,000,000 1,228,792,159 526,000,000 750,000,000 765,000,000 3023 Agriculture, Fisheries, Livestock and Co- 230,000,000 48,434,715 250,000,000 250,000,000 255,000,000 operatives 3026 Devolution & Public Service Administration 110,000,000 17,013,494 90,000,000 90,000,000 91,800,000 Dev TOTAL 5,182,500,050 3,884,377,492 4,400,000,000 4,700,000,000 4,794,000,000 DEPARTMENTS Approved Budget Final Budget Budgeted Projected Projected 2021/2022 2021/2022 2022/2023 2023/2024 2024/2025 3011 The Executive 386,491,789 215,888,018 385,000,000 385,000,000 375,816,961 3012 County Assembly 979,254,392 879,254,392 889,000,000 689,000,000 684,382,942 3013 Public Service Board 150,000,000 77,147,533 150,000,000 150,000,000 133,015,169 3014 Finance & Economic Planning 960,628,600 1,525,608,127 894,484,000 1,260,000,000 1,429,544,736 3015 Energy, Environment & Waste Management 917,000,000 752,791,156 1,045,000,000 920,000,000 977,879,230 3016 Education & Information Technology 1,027,000,000 402,121,630 927,516,000 946,000,000 972,487,701 3017 Health Services 3,641,787,854 3,050,942,314 3,404,000,000 3,720,000,000 3,677,301,511 3018 Water, Sanitation & Natural Resources 1,230,000,000 838,633,595 1,130,000,000 1,330,000,000 1,479,087,137 3019 Youth, Gender, Sports and Cultural Affairs 900,000,000 506,821,445 760,000,000 800,000,000 915,974,308 3020 Trade, Tourism & Investment 845,160,775 458,948,576 830,000,000 730,000,000 808,932,120 3021 Land, Planning, Housing and Urban Renewal 753,000,000 665,890,829 670,000,000 450,000,000 518,106,395 3022 Transport, Infrastructure and Public Works 1,190,000,000 1,595,872,997 1,120,000,000 1,310,000,000 1,227,404,634 3023 Agriculture, Fisheries, Livestock and Co- operatives 503,499,950 208,224,381 485,000,000 500,000,000 482,945,849 3026 Devolution and Public Service Administration 1,016,176,640 2,821,855,009 1,010,000,000 1,010,000,000 951,700,994 Grand TOTAL 14,500,000,000 14,000,000,000 13,700,000,000 14,200,000,000 14,634,579,687 Mombasa County Budget Review and Outlook Paper 2022 42 C. Departments Budgets and Programs Prioritization 102. A key challenge in developing the 2023/24 MTEF budget is the prioritization of resource allocation to pending and ongoing projects. 103. It’s also critical to have the CG Departments capacities continuously strengthened in order to enable them perform their assigned functions effectively and efficiently. The key technical Staff need to be deployed and rationalized to streamline the County activities. 104. Extensive work has been done in providing reporting templates and issuance of budget guidelines so as to ensure consistency in reporting and monitoring progress. 105. Strengthening of the Monitoring and evaluation unit in the Finance and Economic Planning Department will lead to a harmonized monitoring and evaluation system in the county. D. Budget Framework 2023/2024 106. The 2023/24 budget framework is set against the background of the updated medium-term macro-fiscal framework set out above. Revenue Projections 107. The 2023/24 budget targets local revenue of Kshs 4.4 billion and National Government transfer of 9.8 billion. As noted above, this performance will be underpinned by on-going reforms in revenue policy and revenue administration. As such, total revenue including exchequer issues is expected to be Kshs 14.2 billion. Expenditure Forecasts 108. In 2021/22, overall expenditures are projected to be 14.2 billion. Mombasa County Budget Review and Outlook Paper 2022 43 VII. CONCLUSION AND WAY FORWARD 109. The fiscal outcome for 2023/24 together with the updated forecast has had ramification of the financial objectives elaborated in the last CFSP 2022. 110. The FY 2023/24 and the Medium-Term budget and fiscal framework projections presented in this CBROP takes into account the continued recovery in the global economy and risks facing our economy such as public expenditure pressures, the eminent drought and the soaring fuel prices which may reallocate resources from the productive sectors. 111. There is moderate growth in the overall revenue collection and a decline in overall recurrent expenditure as more resources are allocated to complete the ongoing development projects to ensure full implementation of the 2018-2022 CIDP. These measures take into account the need to maintain fiscal discipline in all levels of the government for maximum return from public resources. 112. The set of policies outlined in this CBROP reflect the changed circumstances and are broadly in line with the fiscal responsibility principles outlined in the PFM law. They are also consistent with the national strategic objectives pursued by the Government as a basis of allocation of public resources. 113. The policies ensure continuity in resource allocation based on prioritized programs that have been earmarked by the government to accelerate growth, employment creation with the ultimate objective of ensuring that all citizens enjoy improved standards of living. 114. The fiscal discipline will be important in ensuring proper management of funds and delivery of expected output. Effective and efficient utilization of funds especially on capacity building on different sectors of the county will be crucial in ensuring that the County gets to deliver on its functions. 115. The policies and sector ceilings annexed herewith will guide the Departments in preparation of the 2023/2024 budget. The CG should scale down its budget and then increase it gradually over the medium term as it expands its revenue base. 116. The ceilings will form inputs into the next County Fiscal Strategy Paper (CFSP) which will be developed in February 2023 as per the budget cycle. Mombasa County Budget Review and Outlook Paper 2022 44 ANNEXES ANNEX 1. COMPARISON OF EXCHEQUER ISSUES AND LOCAL REVENUE COLLECTION BY ON MONTHLY BASIS 2021-2022. Month Local Revenue Exchequer Issues July 290,898,301 0 August 158,294,767 605,388,325 September 324,609,448 643,225,095 October 240,688,839 643,225,095 November 161,645,883 1,248,613,420 December 220,922,958 605,388,325 January 498,998,855 643,225,095 February 479,635,817 643,225,095 March 515,926,400 605,388,325 April 290,568,789 681,061,865 May 138,306,690 643,225,095 June 299,135,806 0 Total 3,619,632,553 6,961,965,735 To compare Revenue collection between two major sources ANNEX 2: COMPARISON OF LOCAL REVENUE BETWEEN FY 2017/2018 TO FY 2021/2022 MONTH 2017/2018 2018/2019 2019/2020 2020/2021 2021-2022 JULY 129,214,413 91,417,758 110,950,638 133,177,640 290,898,301 AUGUST 79,711,499 131,853,605 164,871,323 180,063,924 158,294,767 SEPTEMBER 99,058,707 75,372,653 195,639,679 207,752,314 324,609,448 OCTOBER 91,899,794 195,060,885 192,425,344 200,978,869 240,688,839 NOVEMBER 90,313,887 147,641,305 208,065,464 195,076,359 161,645,883 DECEMBER 88,038,962 362,828,365 228,108,277 162,790,308 220,922,958 JANUARY 218,665,976 434,584,730 286,649,313 441,650,127 498,998,855 FEBRUARY 202,052,584 422,738,253 421,483,469 415,598,494 479,635,817 MARCH 952,278,303 733,336,511 634,763,565 541,583,202 515,926,400 APRIL 440,470,531 468,186,699 203,268,450 280,251,148 290,568,789 MAY 336,178,479 203,642,080 160,817,790 211,868,868 138,306,690 JUNE 440,130,574 405,994,209 508,759,315 343,741,925 299,135,806 TOTAL 3,168,013,709 3,672,657,053 3,315,802,627 3,314,533,178 3,619,632,553 To Compare Local Revenue between five fiscal years Mombasa County Budget Review and Outlook Paper 2022 45 ANNEX 3: COMPUTATION OF MONTHLY EXCHEQUER ISSUES BETWEEN FY 2017/2018 TO FY 2021/2022 MONTH EXCHEQUER ISSUES EXCHEQUER ISSUES EXCHEQUER ISSUES EXCHEQUER ISSUES EXCHEQUER ISSUES 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 JULY 597,970,752 0 0 0 0 AUGUST 0 430,761,965 0 0 605,388,325 SEPTEMBER 473,286,618 587,699,500 1,228,083,300 0 643,225,095 OCTOBER 0 741,181,901 632,224,439 1,164,561,750 643,225,095 NOVEMBER 996,790,289 875,741,969 0 828,146,904 1,248,613,420 DECEMBER 843,101,778 822,680,000 824,676,155 574,671,000 605,388,325 JANUARY 866,001,087 944,297,016 949,232,625 798,466,182 643,225,095 FEBRUARY 683,706,112 794,895,339 1,592,730,838 628,955,904 643,225,095 MARCH 712,190,289 0 564,636,000 599,925,750 605,388,325 APRIL 78,786,439 1,515,161,166 40,134,590 599,925,750 681,061,865 MAY 824,219,384 54,151,120 741,084,750 574,844,314 643,225,095 JUNE 2,786,366,845 2,449,218,601 1,517,641,228 2,293,217,209 0 TOTAL 8,862,419,593 9,215,788,577 8,090,443,924 8,062,714,763 6,961,965,735 DISBURSED Mombasa County Budget Review and Outlook Paper 2022 46