REPUBLIC OF KENYA COUNTY GOVERNMENT OF KERICHO DEPARTMENT OF FINANCE AND ECONOMIC PLANNING COUNTY BUDGET REVIEW AND OUTLOOK PAPER (C- BROP) SEPTEMBER 2023 Kericho County Budget Review and Outlook Paper 2023 1 | P a g e FOREWORD The County Budget Review and Outlook Paper (CBROP) 2023 has been prepared in line with Section 118 of the Public Finance Management (PFM) Act 2012. It presents the recent economic developments and actual fiscal performance of the FY 2022/2023 and makes comparisons to the budget appropriations for the same year. In this Paper, we will also provide an overview of how the actual performance of the FY 2022/2023 affected the County’s compliance with the fiscal responsibility principles and the financial objectives. The updated economic and financial outlook presented in this paper will set out the broad fiscal parameters for preparation of the next budget. In particular, the provisional ceilings presented are intended to act as a guide to sector working groups in preparing their budgets. It is therefore my expectation that the policy paper will be useful in enhancing financial discipline and fiscal responsibilities outlined in Section 107 of the PFM Act 2012 that will contribute towards the realization of aspiration of the residents of Kericho County. Hon. Leonard Ngetich C.E.C – Finance and Economic Planning and Head of County Treasury Kericho County Budget Review and Outlook Paper 2023 2 | P a g e TABLE OF CONTENTS FOREWORD ............................................................................................................... 2 TABLE OF CONTENTS ............................................................................................... 3 ACRONYMS ................................................................................................................ 4 1.0 BACKGROUND ..................................................................................................... 5 1.1 LEGAL BASIS FOR THE PREPARATION OF THE COUNTY BUDGET REVIEW AND OUTLOOK PAPER (C-BROP) ..................................................................................... 5 1.1.1. Fiscal Responsibility Principles in the Public Financial Management Law. ..................................................................................................................... 6 2.0 REVIEW OF FISCAL PERFORMANCE IN FINANCIAL YEAR 2022/2023 .......... 7 2.1 OVERVIEW ...................................................................................................... 7 2.2.1 Revenue ..................................................................................................... 9 2.2.2 Expenditure performance ........................................................................ 12 3.2 Medium Term Fiscal Framework ...................................................................... 16 3.3 Risks to the Outlook ......................................................................................... 16 4.0 RESOURCE ALLOCATION FRAMEWORK FOR FY 2024/2025 FINANCIAL YEAR ................................................................................................................................. 17 4.1. 2024/2025 Budget framework ........................................................................ 17 4.1.1 Medium Term Fiscal Projections .................................................................... 17 6.0 CONCLUSION AND WAYFORWARD ................................................................... 18 Kericho County Budget Review and Outlook Paper 2023 3 | P a g e ACRONYMS CRA Commission on Revenue Allocation CRF County Revenue Fund CBK Central Bank of Kenya CBROP County Budget Review and Outlook Paper CFSP County Fiscal Strategy Paper CPI Consumer Price Index FIF Facility Improvement Fund FY Financial /Fiscal year GDP Gross Domestic Product SDR Special Drawing Rights IFMIS Integrated Financial Management Information Systems MTEF Medium Term Expenditure Framework MTFF Medium Term Fiscal Framework MTP Medium Term Plan PFM Act Public Finance Management Act Kericho County Budget Review and Outlook Paper 2023 4 | P a g e 1.0 BACKGROUND The main objective of the County Budget Review and Outlook Paper (CBROP) are to provide a review of the actual fiscal performance in the previous year compared to the budget appropriation for that year and to specify the updated economic and financial forecasts in relation to the changes from the forecasts in the most recent County Fiscal Strategy Paper (CFSP). Finally, to give 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. 1.1 LEGAL BASIS FOR THE PREPARATION OF THE COUNTY BUDGET REVIEW AND OUTLOOK PAPER (C-BROP) Section 118 of the Public Financial Management Act, 2012 states that: 1) A County Treasury shall – (a) Prepare a County Budget Review and outlook Paper in respect of the County for each Financial Year, and (b) Submit the paper to the County Executive Committee by the 30th September of that year. 2) In preparing its County Budget Review and Outlook Paper, the County Treasury shall specify- (a) The details of the actual fiscal performance in the previous year compared to the budget appropriation for that year. (b) The updated economic and financial forecasts with sufficient information to show changes from the forecast in the most recent County Fiscal Strategy Paper. (c) Information on – (i) Any changes in the forecasts compared with County Fiscal Strategy Paper, or Kericho County Budget Review and Outlook Paper 2023 5 | P a g e (ii) How actual financial performance for the previous Financial Year may have affected compliance with the fiscal responsibility principles, or the financial objectives in the County Fiscal Strategy Paper for that Financial Year; and (d) Reasons for any deviation from the financial objectives in the County Fiscal Strategy Paper together with proposals to address the deviation and the time estimated for doing so. 3) The County Executive Committee shall consider the County Budget Review and Outlook Paper with a view to approving it, with or without amendments, within fourteen days after its submission. 4) Not later than seven days after the County Budget Review and Outlook Paper is approved by the County Executive Committee, the County Treasury shall- a) arrange for the Paper to be laid before the County Assembly; and b) as soon as practicable after having done so, publish and publicize the Paper. Under section 137 of the PFM Act 2012, the County Budget and Economic forum purpose shall be; (a) Preparation of county plans, the County Fiscal Strategy Paper and the Budget Review and Outlook Paper for the county; and (b) Matters relating to budgeting, the economy and financial management at the county level. 1.1.1. Fiscal Responsibility Principles in the Public Financial Management Law. 1. The Public Financial Management Act, 2012, sets out the fiscal responsibility principles to ensure prudency and transparency in the management of public resources. Section 107 avers that: Kericho County Budget Review and Outlook Paper 2023 6 | P a g e 1) A County Treasury shall manage its public finances in accordance with the principle of fiscal responsibility set out in subsection (2) and shall not exceed the limits stated in the regulations. 2) In managing the county government’s public finances, the County Treasury shall enforce the following fiscal responsibility principles- (a) The County government recurrent expenditure shall not exceed the county government’s total revenue. (b) Over the medium term a minimum of thirty percent of the county government’s budget shall be allocated to the development expenditure: (c) The county government’s expenditure on wages and benefits for the Public Officers shall not exceed a percentage of the county government’s total revenue as prescribed by the County Executive Member for Finance in regulations and approved by the County Assembly. (d) Over the medium term, the government’s borrowings shall be used for the purpose of financing development expenditure and not for recurrent expenditure i.e., the county debt shall be maintained at a sustainable level as approved by the County Assembly. 2.0 REVIEW OF FISCAL PERFORMANCE IN FINANCIAL YEAR 2022/2023 2.1 OVERVIEW The County’s approved final Supplementary Budget for FY 2022/23 was Kshs.8.45 billion, comprising of Kshs.5.8 billion (69 per cent) and Kshs.2.6 billion (31 per cent) allocation for development and recurrent programmes respectively. To finance the budget, the County expected to receive Kshs.6.4 billion (76 per cent) as equitable share of revenue raised nationally, Kshs.8.9 million (0.11 per cent) as total conditional grants, Kshs 473.76 million (5.6 per cent) as donor funds, generate Kshs.1.019 billion (12.06 per cent) from own sources of revenue, Insurance Kericho County Budget Review and Outlook Paper 2023 7 | P a g e Compensation of Kshs 5.8 million (0.07 per cent) and had Kshs.515.16 million (6.09 per cent) as cash balance from FY 2021/22. Table 1: Summary of Final 2 Supplementary Budget FY 2022/23 Line Ministries/Departments RECURRENT DEVELOPMENT TOTAL SUPPL 2 % SUPPL 2 SUPPL 2 1 County Assembly Services 933,813,928 45,673,899 979,487,827 12% 2 Public Service & Administration 424,870,257 5,950,340 430,820,597 5% 3 Office of the Governor & Deputy governor 166,179,145 - 166,179,145 2% 4 County Public Service Board 57,471,889 - 57,471,889 1% 5 Finance & Economic Planning 451,244,683 565,848,203 1,017,092,886 12% 6 Health Services 2,628,069,196 421,551,852 3,049,621,048 36% 7 Agriculture, Livestock Development & Fisheries 177,040,742 365,575,812 542,616,554 6% 8 Education, Youth Affairs, Culture & Social Services 532,762,085 140,670,280 673,432,365 8% 9 Public Works, Roads & Transport 82,915,604 564,869,856 647,785,460 8% 10 Trade, Industrialization, Tourism, Wildlife & 61,029,360 3,120,186 64,149,546 1% Cooperative Development 11 Water, Energy, Natural Resources & Environment 154,934,193 363,492,253 518,426,446 6% 12 Land, Housing & Physical Planning 99,122,639 96,434,313 195,556,952 2% 13 Information, Communication & E-Government 55,833,107 36,361,897 92,195,004 1% 14 STRATEGIC INTERVENTION 18,737,382 18,737,382 0% TOTAL EXPENDITURE 5,825,286,828 2,628,286,272 8,453,573,101 100% Table 2: Shows the expected sources of budget financing in the FY 2022/23 FINANCIAL YEAR 2022/23 Supplementary II Revenue Description 1.CRA Equitable share 6,430,664,924 2.Local Collections 385,071,600 3.Facility Improvement Fund & NHIF Rebates 634,316,453 4.CONDITIONAL GRANTS - 4A. Routine Maintenance Fuel Levy 8,916,435 5. DONOR FUNDS - 5A. DANIDA FUND 9,180,000 5B. Agricultural Sector development support Fund (ASDSP II) 43,114,132 5C. Transformative health system (world bank) 75,443,658 5D. Kenya Devolution Support Project (world bank) 102,491,953 5E. Climate Smart Agriculture Project (world bank) 149,190,522 5F. Kenya Urban Support Program UDG (SIDA) 1,194,559 5F. Kenya Urban Support Program UIG (SIDA) 1,145,356 5G. Climate Change Institutional Support (World bank) 22,000,000 Kericho County Budget Review and Outlook Paper 2023 8 | P a g e 5H. IDA National Agricultural Value Chain Devt Project (NAVCDP 70,000,000 Insurance compensation 5,678,000 UNSPENT FUND 515,165,509 Gross Total 8,453,573,101 2.2 FISCAL PERFORMANCE 2.2.1 Revenue During FY 2022/23, the County received Kshs. 6.430 billion as equitable share of revenue raised nationally, Kshs. 8.9 million as total conditional grants, Kshs 410.8 million as donor funds, insurance compensation of Kshs 5.678 million and had a cash balance of Kshs.515 million from FY 2021/22. The County also raised Kshs.501.3 million from its own source revenue. In overall, actual income received by the County Treasury reflected a deficit of Kshs 580.7 million attributable to delayed releases the Donors Funds and Own source revenue target was not achieved by Kshs 518 million including the FIF and NHIF rebates. Table 3: Analysis of Exchequer Releases per Quarter Kshs Total Exchequer Releases for quarter 1 1,061,059,713 Total Exchequer Releases for quarter 2 1,061,059,712 Total Exchequer Releases for quarter 3 1,061,059,712 Total Exchequer Releases for quarter 4 3,247,485,787 Total 6,430,664,924 Kericho County Budget Review and Outlook Paper 2023 9 | P a g e Table 4: Analysis Own Source Revenue by Streams Revenue Stream ANNUAL 2022/2023 2022/2023 Q2 2022/2023 2022/2023 YTD ACTUAL VARIANCE PROJECTION Q1 ACTUAL ACTUAL Q3 ACTUAL Q4 ACTUAL FY 2022-23 Hospital Payments 528,196,453 46,530,875 35,610,973 58,201,020 80,804,702 221,147,570 (307,048,883) Bus Park Fees 25,000,000 3,158,922 3,695,990 4,422,070 4,103,430 15,380,412 (9,619,588) Market Fees 30,000,000 3,348,240 4,218,930 4,193,170 4,324,085 16,084,425 (13,915,575) Car Park Fees 15,000,000 2,894,650 2,898,850 2,561,700 3,049,500 11,404,700 (3,595,300) Single Business Permit 65,000,000 1,981,500 2,329,000 37,553,000 19,239,100 61,102,600 (3,897,400) Advertisement, Branding and 10,000,000 3,967,100 1,143,899 6,150,440 3,141,024 14,402,463 4,402,463 Billboard Fees Land and Property Rates Fees 90,000,000 2,642,859 2,524,169 985,045 45,900 6,197,973 (83,802,027) Public Health Payments 5,000,000 1,207,600 877,900 1,193,100 750,700 4,029,300 (970,700) House Rent Fees 10,000,000 1,622,350 5,837,900 -2,424,400 2,199,079 7,234,929 (2,765,071) Building Plan Approvals Fees 10,000,000 731,220 1,173,090 3,246,775 2,179,035 7,330,120 (2,669,880) Weights and Measures Fees 5,000,000 203,740 1,093,810 685,030 229,230 2,211,810 (2,788,190) Quarry Stone Cess 3,000,000 481,400 449,700 655,300 778,300 2,364,700 (635,300) Agriculture Livestock , Veterinary 2,500,000 528,330 621,645 584,585 368,115 2,102,675 (397,325) Payments and Machinery Services. Signages Fees 6,000,000 77,900 181,500 3,459,600 1,070,700 4,789,700 (1,210,300) Slaughterhouse Operation Fees 1,500,000 291,500 304,940 315,900 257,260 1,169,600 (330,400) Stockyard Sales Fees 2,000,000 414,420 494,380 438,220 380,760 1,727,780 (272,220) Boda Boda Payments 5,000,000 2,100 1,500 28,200 13,000 44,800 (4,955,200) Reserved Parking Fees 2,000,000 - 832,000 2,198,400 403,500 3,433,900 1,433,900 Refuse Fees 8,000,000 146,400 168,800 4,340,200 1,812,600 6,468,000 (1,532,000) Plot Rent 2,000,000 139,913 946,793 1,089,776 241,566 2,418,048 418,048 Produce Cess 2,500,000 1,232,834 4,057,887 -3,811,460 1,562,467 3,041,728 541,728 Nema Fees, Drilling Services 250,000 400,000 140,000 353,500 85,000 978,500 728,500 Fire License Fees 6,000,000 202,300 165,400 2,708,700 1,057,100 4,133,500 (1,866,500) Survey Fees 700,000 101,000 133,000 152,800 85,000 471,800 (228,200) Murram, Ballast , Sand & Scrap 1,000,000 57,700 199,700 213,600 451,900 922,900 (77,100) Metal Cess Fees Inspection Fees 2,500,000 95,000 72,100 1,321,700 800,700 2,289,500 (210,500) Application/Registration Fees 2,500,000 80,200 43,000 828,200 770,500 1,721,900 (778,100) Forest Cess/Seedling Sale Yard 500,000 58,800 41,200 59,300 343,400 502,700 2,700 Clamping, Fines and Impounding 300,000 21,800 123,100 81,450 105,650 332,000 32,000 Fees Kericho County Budget Review and Outlook Paper 2023 10 | P a g e Revenue Stream ANNUAL 2022/2023 2022/2023 Q2 2022/2023 2022/2023 YTD ACTUAL VARIANCE PROJECTION Q1 ACTUAL ACTUAL Q3 ACTUAL Q4 ACTUAL FY 2022-23 Business Permits Late Payment 500,000 29,750 4,631 7,100 459,621 501,102 1,102 Penalties, Current Year Tea Transport Cess fees 100,000 - - 73,500 0 73,500 (26,500) Audit Fees 50,000 3,000 3,000 12,000 27,000 45,000 (5,000) Cemetery Fees 15,000 2,000 2,000 5,000 2,500 11,500 (3,500) Hire Of Social Hall/Park & Stadium 450,000 221,000 31,500 21,500 20,000 294,000 (156,000) Fees Alcoholic Drink License Fees 5,000,000 - - 3,000,000 2,000,000 5,000,000 - Coffee Fees 750,000 1,000 - 0 0 1,000 (749,000) Land Cultivation Fees 500,000 - - 15,883,692 66,926,718 82,810,410 82,310,410 Kabianga Tea Farm Payments 5,000,000 300,000 - 600,000 600,000 1,500,000 (3,500,000) Insurance Compensation 0 5,678,000 - 0 - 5,678,000 5,678,000 TOTAL REVENUE STREAMS 853,811,453 78,855,403 70,422,287 151,387,713 200,689,142 501,354,545 (352,456,908) Kericho County Budget Review and Outlook Paper 2023 11 | P a g e Table 5: Analysis of Receipt from Conditional Grants CONDITIONAL GRANTS Routine Maintenance Fuel Levy 8,916,435 Total Conditional Grants 8,916,435 Table 6: Analysis of Donor Funds Receipts. DONOR FUNDS DANIDA FUND 5,960,625 Agricultural Sector development support Fund (ASDSP) 9,250,013 Transformative health system (world bank) 75,443,658 Kenya Devolution Support Project (world bank) 102,491,953 Climate Smart Agriculture Project (world bank) 126,184,585 Kenya Urban Support Program UDG (WORLD BANK) 1,194,559 Kenya Urban Support Program UIG (WORLD BANK) 1,145,356 Climate Change Institutional Support (World bank) 22,000,000 National Agricultural Value Chain Devt Project (NAVCDP) 67,192,729 410,863,478 2.2.2 Expenditure performance Total expenditure amounted to Kshs. 7.622 billion comprising of Kshs 5.43 billion and Kshs 2.19 billion for recurrent and development expenditure respectively compared to previous year 2021/22 with a total of Kshs 6.36 billion of which Kshs 4.33 and Kshs.2.03 billion represented expenditures for recurrent and development respectively Table 7: FY 2022/2023 Total Expenditure Analysis (Excluding County Assembly) Expense Category Final Approved Total Expenditure Variance (Kshs) Absorption Budget Rate (%) Recurrent 5,825,286,828 5,431,889,016 393,397,812 93% Development 2,628,286,272 2,190,789,976 437,496,296 83% TOTAL 8,453,573,100 7,622,678,993 830,894,108 90% Source: County Treasury Global Expenditure analysis Overall, the absorption rate for consolidated expenditure was 90% which was equivalent to Kshs. 7,622,678,993 against allocation of Kshs. 8,453,573,101. Kericho County Budget Review and Outlook Paper 2023 12 | P a g e Table 8: Expenditure Analysis by County Entity DEPARTMENT: EXECUTIVE OFFICE OF THE GOVERNOR Programme Sub-Programme Approved Supplementary 2 Actual Expenditure Jul 22 - Jun Absorption Estimates FY 2022/23 (Kshs.) 23 (Kshs.) Rate Recurrent Development Recurrent Development Rec Dev Expenditure Expenditure Expenditure Expenditure County Coordination Services County Coordination Services 166,179,145 - 169,717,643 - 102% 166,179,145 - 169,717,643 - 102% DEPARTMENT: FINANCE AND ECONOMIC PLANNING Administration, Planning and Administration Services. 389,808,359 531,007,953 372,366,744 453,233,260 96% 85% Support Services. Administration, Planning and Monitoring Budget 39,367,385 - 39,344,031 - 100% Support Services. Implementation and Reporting Public Finance Management Budget Formulation 14,443,300 53,577,631 14,021,990 35,874,870 97% 67% coordination and management Audit Services County Audit 7,625,639 - 7,625,639 - 100% 451,244,683 584,585,584 433,358,404 489,108,129 96% 84% DEPARTMENT: AGRICULTURE, LIVESTOCK AND FISHERIES Policy, Strategy and Development of Agricultural 47,661,253 2,000,000 43,058,607 1,999,950 90% Management of Agriculture Policy, Legal & Regulatory framework. Crop Development and Agriculture Extension Services 63,045,165 350,241,329 57,848,456 300,077,894 92% 86% Management Livestock Resource Livestock Disease Management 3,653,808 12,334,483 2,898,545 25,388,420 79% 206 Management and Development and Control. % Livestock Resource Livestock Production and 55,326,343 - 39,190,767 - 71% Management and Development Extension Services Fisheries development Management and Development 7,354,173 1,000,000 1,135,711 1,000,000 15% 100 of Capture Fisheries % 177,040,742 365,575,812 144,132,085 328,466,264 81% 90% DEPARTMENT: WATER, ENERGY, NATURAL RESOURCES AND ENVIRONMENT Environment policy Planning Coordination Policy 140,960,355 25,618,837 142,407,831 23,866,110 101% 93% development and coordination and Administrative Services Water supply services Rural Water Supply 13,973,838 337,873,416 13,992,280 294,715,590 100% 87% 154,934,193 363,492,253 156,400,110 318,581,700 101% 88% DEPARTMENT: EDUCATION, YOUTH AFFAIRS, CULTURE AND SOCIAL SERVICES General Administration & Policy Development and 342,468,689 - 335,182,580 - 98% planning services. Administration Kericho County Budget Review and Outlook Paper 2023 13 | P a g e Basic Education Early Childhood Development 181,293,396 93,574,311 175,595,508 25,918,831 97% 28% Education Gender and Social Social Welfare Services/Social 9,000,000 8,095,969 4,579,712 8,000,000 51% 99% Development Infrastructure Development Youth development and Youth development (YP) - 39,000,000 - 32,189,533 83% empowerment services Training 532,762,085 140,670,280 515,357,800 66,108,364 97% 47% DEPARTMENT: HEALTH SERVICES Curative Health Administration and Planning 1,527,229,294 188,774,449 1,361,862,890 141,490,179 89% 75% Preventive and Promotive Preventive Medicine and 1,100,839,902 232,777,403 9 6% 82% Health Promotive Health 1,060,173,459 190,736,189 2,628,069,196 421,551,852 2,422,036,349 332,226,368 92% 79% DEPARTMENT: LANDS, HOUSING AND PHYSICAL PLANNING Administration and support General Administration and 48,241,424 26,500,000 1 0 6 % 100 services Planning 51,293,341 26,500,000 % Housing Development and Housing Development 10,628,496 66,037,768 1 0 0 % 96% Human Resource 10,595,882 63,407,368 Land policy and planning Development Planning and 34,150,276 - 34,088,225 - 100% 0% Land Reforms Land policy and planning Land Use Planning 6,102,443 3,896,545 5,858,348 - 96% 0% 99,122,639 96,434,313 101,835,795 89,907,368 103% 93% DEPARTMENT: PUBLIC WORKS, ROADS AND TRANSPORT Transport Management and General Administration 71,809,287 - 59,445,502 - 83% safety Planning and Support Services Infrastructure, Roads and Rehabilitation of Road 3,900,000 564,869,856 3,900,000 510,187,463 100% 90% Transport Infrastructure, Roads and Maintenance of Roads and 7,206,317 - 1 0 0 % 0 % Transport Bridges/Periodic Maintenance 7,206,317 - 82,915,604 564,869,856 70,551,819 510,187,463 85% 90% DEPARTMENT: TRADE, INDUSTRIALISATION, TOURISM, WILDLIFE AND COOPERATIVE MANAGEMENT Trade development and Fair trade Practices and 42,484,763 3,120,186 8 5 % 102 investment Consumer Protection (weight & 35,928,645 3,176,858 % measures) Trade development and Administrative and Support 16,348,095 - 8 9 % 0 % investment Services. 14,524,907 - Cooperative development and Cooperative Advisory & 2,196,502 - - 100% 0% management Extension Services. 2,196,502 61,029,360 3,120,186 52,650,054 3,176,858 86% 102% DEPARTMENT: ICT AND E-GOVERNMENT Kericho County Budget Review and Outlook Paper 2023 14 | P a g e Information & Communication News and Information Services 51,466,937 36,361,898 38,192,114 39,225,396 74% 108 Service % Information & Communication ICT and BPO development 4,366,170 - 4,366,170 - 100% Service services 55,833,107 36,361,898 42,558,284 39,225,396 76% 108% DEPARTMENT: COUNTY PUBLIC SERVICE BOARD Administration of Human Establishment, Appointment, 57,471,889 - 61,929,772 1 0 8 % Resources and Public Service Discipline& Board Management - 57,471,889 61,929,772 - 108% DEPARTMENT: PUBLIC SERVICE MANAGEMENT Administration of Human General Administration, 284,084,073 5,950,340 261,965,243 5,949,712 92% 100 Resources and Public Service Planning and Support Services % Administration of Human Human Resource Development 140,786,184 - 93,188,717 - 66% Resources and Public Service 424,870,257 5,950,340 355,153,960 5,949,712 84% 100% County Executive Grand Total 4,891,472,900 2,582,612,374 4,525,682,075 2,182,937,623 93% 85% Kericho County Budget Review and Outlook Paper 2023 15 | P a g e 3.2 Medium Term Fiscal Framework The county government will continue to pursue fiscal responsibility to ensure prudency and transparency in the management of public resources as per the Public Finance Management Act section 107. On the expenditure side, the County Government will continue with rationalization of expenditure to improve efficiency and reduce wastage. Expenditure management will be strengthened with implementation of the Integrated Financial Management Information System (IFMIS) across Departments. The county will continue reorienting 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 development. 3.3 Risks to the Outlook Various risks impact on the county economic performance. These may include adverse changes in macro- economic factors such as rise in inflation and interest rates and low growth in investments At the county government level risks arise out of uncertainty both from internal and external factors. Managing such risks by recognizing and preparing for possible eventualities is an integral part of planning. The main challenges that continue to be experienced relate to unrealized projected local revenue collection against the targeted projected collection by 32.7 per cent from the previous Financial Year, bloated wage bill at 42 per cent of total revenue and huge pending bills of over Kshs 613 million as Kericho County Budget Review and Outlook Paper 2023 16 | P a g e indicated in the last County Debt Management strategy Paper, some of which are statutory deductions that accrue huge interests. The county revenue projections are subject to a number of general risks that can affect collections. These include resistance that may arise from County Finance Bill, tax evasion and avoidance, weak revenue administrative structures and significant fluctuations in major revenue sources due to changes in the economic environment. These challenges may result in a significant deviation from revenue projections and consequently lead to huge unfunded budget deficits. 4.0 RESOURCE ALLOCATION FRAMEWORK FOR FY 2024/2025 FINANCIAL YEAR 4.1. 2024/2025 Budget framework The FY 2024/25 and the Medium-Term Budget framework builds up on the Government’s efforts to stimulate and sustain economic activity, mitigate the adverse impact of COVID-19 pandemic on the economy and re-position the economy on a sustainable and inclusive growth trajectory. This will be achieved through implementation of programmes in the Economic Recovery Strategy, The Third Generation County Integrated Development Plan and priority programmes outlined in the Fourth Medium Term Plan (MTP IV) of the Vision 2030. Additionally, the County Government will continue to implement its fiscal consolidation plan to contain the pace of growth in debt. In this regard, particular emphasis will be placed on aggressive revenue mobilization including policy measures to whip in additional revenue and reign on expenditures to restrict its growth. 4.1.1 Medium Term Fiscal Projections Going forward, and in view of the limited resources, MTEF budgeting will entail adjusting non-priority expenditures to cater for the priority sectors. In Kericho County Budget Review and Outlook Paper 2023 17 | P a g e the Meantime, the resource allocation will be based on the Annual Development Plan and the Fiscal Strategy Paper. 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 Expenditure Forecasts The expenditure comprises recurrent and development votes. The County Treasury will endeavor to maintain fiscal responsibility principle of 70:30 in 2023/2024 for recurrent and development expenditures as required by section 107 of the Public Finance Management Act, 2012. 6.0 CONCLUSION AND WAYFORWARD The CBROP 2023 is being prepared against the backdrop of a Global economic outlook that has become more uncertain reflecting, the impact of the ongoing Russia-Ukraine conflict, effects of COVID-19 containment measures, elevated inflationary pressures, volatile financial markets, and persistent supply chain disruptions. To strengthen the economic recovery, the budget for FY 2023/24 and the medium term will focus on revenue mobilization and reduction on non- core expenditures. Fiscal discipline will be important in ensuring proper management of funds and delivery of expected output. Effective and efficient utilization of funds by the various departments will be crucial in ensuring the county delivers her functions. Plans and programme are strictly adhered to achieve the objectives of the County government. Kericho County Budget Review and Outlook Paper 2023 18 | P a g e