COUNTY GOVERNMENT OF NAROK BUDGET REVIEW AND OUTLOOK PAPER ACCELERATING ECONOMIC RECOVERY FOR IMPROVED LIVELIHOOD i Foreword The County Budget Review and Outlook Paper (C-BROP) is a statutory policy document in the review and analysis of County budget performance. The document has been prepared in accordance with section 118 of Public Finance Management Act (PFM, 2012). In the Act, County Treasuries are required to prepare and submit C-BROPs to respective County Executive Committees by 30th September every year. As a policy document, C-BROP provides an outlook of performance of budget of the previous financial year showing estimates, actuals, and deviations. It is also a review of budget appropriations and their linkages to financial forecasts and compliance with the fiscal responsibility principles and financial objectives outlined in the PFM Law of 2012. The 2022 C-BROP is structured to show the financial and economic trends not only at the county level but also at the national, regional and global scenes. The trends are applied to inform policy direction, actions and strategies which will be adopted in the 2023 County Fiscal Strategy Paper (CFSP). It’s expected that the ceilings in the C-BROP will be firmed up in the 2023 County Fiscal Strategy Paper. The C-BROP will form a basis for the development of the budget for FY 2023/24 and over the medium-term period. Further, the outcome of the fiscal performance for FY 2021/22 budget will be useful in advising the revision of estimates for FY 2022/23. The policy considerations in this C-BROP have 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. In the case for Narok County, the economy is demonstrating remarkable resilience and recovery to the global and national shock due to the diversified nature of the economy and the proactive Government measures to support businesses. This is reflective of the national economic outlook which is on the rebound following the impacts of COVID 19. On this basis, the economic growth in 2021 is reported at 7.5 percent following a modest 0.3 percent contraction in 2020. The growth momentum continued in the first quarter of 2022 with the economy expanding by a remarkable i 6.8 percent compared with a growth of 2.7 percent in a similar quarter in 2021. This outlook has a bearing on the expected performance in Narok county. Its also the basis upon which the forecasts in this has been made. The fiscal performance in the FY 2021/22 was satisfactory, largely attributed to improved operating business environment following the recovery of the economy from the adverse impact of COVID-19 pandemic. The National Revenue performance recorded a growth of 22.0 percent compared to a marginal growth of 0.3 percent in FY 2020/21. As we prepare for the FY 2023/24 budget, emphasis should be on aggressive revenue mobilization including policy measures to whip in additional revenue and reign on expenditures to restrict its growth and also on development priorities, programmes and projects linked to the global, national, and development policies and strategies including the Constitution of Kenya 2010, the Fourth Medium Term Plan (MTP IV) of the Kenya Vision 2030, County Integrated Development Plan (2023-2027), National Sector Plans, Sustainable Development Goals (SDGs) and Narok County COVID-19 Social Economic Re-Engineering Recovery Strategy. The 2022 C-BROP is carefully prepared in-order-to align with the Finance Act 2022 which proposes various revenue sources and applicable levies. The Finance Act 2022 takes into account the need to promote revenue collection and at the same time leverage on the existing capacities in revenue streams to finance programmes to accelerate and sustain inclusive growth for socio- economic recovery and transformation of lives for all residents in the county. This has taken cognizance of the imminent closure of some donor funded programmes. In this regard the County Government will endeavor to put in place viable revenue raising strategies for enhancing revenue collection in critical revenue streams with a view of ensuring that the revenue targets are met. Further, the county government will adopt an aggressive intervention to fill anticipated gap in donor funding by applying a targeted scaling-up of budgetary allocation towards the affected programmes including immunization. Kenya’s transition to a lower-middle income status has increased the domestic funding obligation for the country’s immunization programme, which is now required to achieve full self-funding by 2028. ii Given the tight resource envelope, all Sector Working Groups are required to carefully scrutinize all proposed County Government Departments and Agencies (CGDA’s) budgets for FY 2023/24 and the medium term to ensure that they remain within the ceilings provided to ensure that the County Government is able to budget within its means and guarantee socio-economic development. In this regard, I therefore, call upon all to adhere to the hard sector ceilings, and the strict deadlines provided in this document to facilitate the finalization and appropriation of the FY 2023/24 and the medium-term budget. HON. JULIUS M.T. SASAI CECM - FINANCE, ECONOMIC PLANNING, ICT AND E-GOVERNMENT COUNTY GOVERNMENT OF NAROK iii Acknowledgement The development of Narok County Budget Review and Outlook Paper (C-BROP 2022) has been made possible through the participation of many stakeholders. We are very grateful to the County Executive Committee for overall leadership throughout the entire process. To all county departments, units and agencies, we appreciate your invaluable inputs in the preparation of this policy document. Special thanks goes to the County Executive Committee Member for Finance, Economic Planning and ICT; Hon. Julius Sasai, for his guidance and coordination in developing this statutory document. We also are grateful for the collaboration and the comments received from the Chief Officers, County technical staffs and other stakeholders. We would also like to appreciate the members of the secretariat who spent significant time collecting, collating and analyzing data from various entities within the county. The secretariat that comprised of technical staffs from economic planning unit and finance, worked tirelessly and spent extra time to review this document to ensure it satisfies the PFM Act, 2012 and sets out the sector ceilings that will guide the rest of the sectors in the preparation of their FY 2023/24 and the Medium Term Budget. Finally, allow me to thank each and every person who was involved in this process for your dedication, sacrifice, commitment and assistance. I wish to reiterate the importance of public participation in FY 2023/24 Medium Term Budget preparation process by calling on all Sector Working Groups to devise an engagement framework that will deepen open public and stakeholders’ participation and incorporation of the proposals received. SIMON KURRARU CHIEF OFFICER – FINANCE AND ECONOMIC PLANNING COUNTY GOVERNMENT OF NAROK iv Table of Content FOREWORD .................................................................................................................................................. I ACKNOWLEDGEMENT .............................................................................................................................. IV TABLE OF CONTENT .................................................................................................................................. V LIST OF TABLES ....................................................................................................................................... VII LIST OF FIGURES...................................................................................................................................... VII ABBREVIATIONS AND ACRONYMS ....................................................................................................... VIII LEGAL BASIS FOR THE PUBLICATION OF THE BUDGET REVIEW AND OUTLOOK PAPER ..............................................IX FISCAL RESPONSIBILITY PRINCIPLES IN THE PUBLIC FINANCIAL MANAGEMENT LAW ................................................. X I INTRODUCTION ....................................................................................................................................... 11 BACKGROUND ......................................................................................................................................................................... 11 OBJECTIVE OF THE C-BROP...................................................................................................................... 11 II REVIEW OF FISCAL PERFORMANCE IN 2021/22 .......................................................................... 12 A. OVERVIEW ........................................................................................................................................................................... 12 B. 2021/22 FISCAL PERFORMANCE ............................................................................................................................. 13 Revenues ............................................................................................................................................ 13 Expenditure ......................................................................................................................................... 16 Overall balance and financing ............................................................................................................. 17 C. .................................................................................................................................................................... IMPLICATION OF 2021/22 FISCAL PERFORMANCE ON FISCAL RESPONSIBILITY PRINCIPLES AND FINANCIAL OBJECTIVES CONTAINED IN THE 2022 CFSP ............................................................................................... 18 III. RECENT ECONOMIC DEVELOPMENTS AND OUTLOOK ................................................................. 19 C. MEDIUM TERM FISCAL FRAMEWORK ............................................................................................................................. 24 D. RISKS TO THE OUTLOOK .................................................................................................................................................. 26 IV. RESOURCE ALLOCATION FRAMEWORK ......................................................................................... 27 A. ADJUSTMENT TO 2022/23 BUDGET ................................................................................................................................ 27 B. MEDIUM-TERM EXPENDITURE FRAMEWORK ................................................................................................................. 29 C.2022/23 BUDGET FRAMEWORK ...................................................................................................................................... 30 Revenue Projections ........................................................................................................................... 31 TABLE 7: TENTATIVE CEILINGS FOR FY 2023/24(AMOUNT IN MILLIONS KSH) ................................................ 32 V. CONCLUSION AND WAYFORWARD ................................................................................................... 33 ANNEX I: BUDGET CALENDAR ................................................................................................................ 34 ANNEX II: MTEF SECTORS CLASSIFICATION IN NAROK COUNTY ..................................................... 36 ANNEX III: FORMAT FOR PRESENTATION OF PROGRAMME-PERFORMANCE BASED BUDGETS (PBB) .......................................................................................................................................................... 37 ANNEX IV: SECTOR WORKING GROUP REPORT FORMAT ................................................................. 42 v ANNEX V: FORMART FOR PRESENTIG PROJECT DETAILS FOR FY 2023/2024 AND THE MEDIUM-TERM BUDGET…………………………………………………………………………………………………………….44 ANNEX VI: FORMART FOR OUTCOME BASED PROJECT REPORTING…………………………………45 ANNEX V: TIMELINE FOR TABLING COUNTY BUDGET DOCUMENTS IN THE COUNTY ASSEMBLY AND RELEASE TO THE PUBLIC– CPP GUIDELINES 2015…………………………………………………………46 List of Tables TABLE 1: DEVIATIONS FROM THE INITIAL AND REVISED BUDGET ESTIMATES (KES.) .......................................... 13 TABLE 2: A BREAKDOWN OF TRANSFERS FROM NATIONAL GOVERNMENT IN FY 2021/22 (KSH.) ....................... 14 TABLE 3: LOCAL REVENUE SOURCES - COUNTY GOVERNMENT OF NAROK REVENUE (KES) ............................ 15 TABLE 4: QUARTERLY REVENUE FLOWS IN FY 2021/22 (KSH) ........................................................................ 15 TABLE 5: EXPENDITURE BY DEPARTMENT IN FY 2021/22 (KSH) ....................................................................... 16 TABLE 6: FISCAL PROJECTIONS FOR 2022/2023 - 2023/2024 (KSH) ............................................................... 28 TABLE 7: TENTATIVE CEILINGS FOR FY 2023/24(AMOUNT IN MILLIONS KSH) .................................................... 32 List of Figures FIGURE 1: NAROK COUNTY GOVERNMENT EXPENDITURES ON RECURRENT AND DEVELOPMENT (ESTIMATES AGAINST ACTUALS) .................................................................................................................................................................... 17 vi Abbreviations and Acronyms ADP Annual Development Plan CFSP County Fiscal Strategy Paper C-BROP County Budget Review and Outlook Paper CBR Central Bank Rate CRA Commission for Revenue Allocation FY Financial Year GDP Gross Domestic Product IMF International Monetary Fund KES Kenya Shillings KEU Kenya Economic Update MDAs Ministries, Departments and Agencies MTEF Medium Term Expenditure Framework MTP Medium-Term Plan PFM Public Financial Management PSA Public Service Administration PPP Public Private Partnership SWG Sector Working Group USD United State Dollar vii Legal Basis for the Publication of the Budget Review and Outlook Paper The 2022 County Budget Review and Outlook Paper is prepared in accordance with Section 118 of the Public Finance Management Act, 2012. The law states that: 1. The 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 include: 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 forecasts in the most recent County Fiscal Strategy Paper; c) Information on any changes in the forecasts compared with the County Fiscal Strategy Paper and 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; 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. viii Fiscal Responsibility Principles in the Public Financial Management Law In line with the Constitution, the new Public Finance Management (PFM) Act, 2012, sets out the fiscal responsibility principles to ensure prudency and transparency in the management of public resources. The PFM law (Section 107(2) states that: In managing the county government's public finances, the County Treasury shall enforce the following fiscal responsibility principles- a) The county government’s 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 its 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 only for the purpose of financing development expenditure and not for recurrent expenditure; e) The county debt shall be maintained at a sustainable level as approved by county assembly; f) The fiscal risks shall be managed prudently; and g) 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. ix I INTRODUCTION Background 1. The County Budget Review and Outlook Paper (C-BROP 2022) has been prepared in line with the provisions of the Public Finance Management, PFM Act, 2012 that are relevant to the devolved systems of Government. Specifically, the Act requires that every County prepares a C- BROP by 30th September of that financial year. The C-BROP reviews the actual fiscal performance of the financial year 2021/22 and makes comparisons to the budget appropriations for the same year. It also provides the recent economic developments and the updated economic and financial forecast with sufficient information to show variations from the initial forecast in FY 2021/22. Objective of the C-BROP 2. The objective of this paper is to provide; i. Details of the actual County Fiscal performance in financial year 2021/22 compared to the budget appropriation of the same year. ii. An updated economic and financial forecast with sufficient information to show changes from the forecasts in the most recent County Fiscal Strategy Paper. iii. Information on any changes in the forecasts compared with the County Fiscal Strategy Paper or 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. iv. Reasons for any deviation from the financial objectives in the CFSP together with the proposals to address the deviation and the estimated timeframe for doing so. 3. The C-BROP is a key document in linking policy, planning and budgeting. The 2022 C- BROP points the need to emphasis on aggressive revenue mobilization including policy measures to whip in additional revenue and reign on expenditures to restrict its growth and also on development priorities, programmes and projects linked to the global, national, and development policies and strategies including the Constitution of Kenya 2010, the Fourth Medium Term Plan (MTP IV) of the Kenya Vision 2030, County Integrated Development Plan (2023-2027), National Sector Plans, 1 Sustainable Development Goals (SDGs) and Narok County COVID-19 Social Economic Re- Engineering Recovery Strategy. The policy formulation, planning and programming will be done taking account Ongoing and new development and emerging issues considered in the End Term review of the CIDP 2018-2022. 4. The goal of C-BROP 2022 is three prong; it reviews the budgetary performance in FY 2021/22 and at the same time make fiscal recommendation to guide budgetary execution in the remaining period of FY 2022/23 and guide the preparation of FY 2023/2024 budget. 5. The rest of the paper is organized as follows. The next section provides a review of the fiscal performance in budget for FY 2021/22. This is followed by brief highlights of the recent Fiscal developments and an updated economic outlook in section III. Section IV provides the resources allocation framework, while section V is a summary of the overall expenditure and revenue performance in FY 2021/22 and policy recommendation for the successive period(s). II REVIEW OF FISCAL PERFORMANCE IN 2021/22 A. Overview 6. This section provides an overview of the performance and implementation of the budget for the financial year 2021/22 and how this may have affected compliance with the fiscal responsibilities. This will be useful in providing a basis for setting out broad fiscal parameters for subsequent budgets. 7. The revenue and expenditure targets for FY 2021/2022 were estimated in such a manner as to form a balanced budget at KSh. 12,018,610,000 mark. The estimates were in the course of time revised to KSh. 13,352,112,888.50. The actual revenue and expenditures realized by June 30th, 2022 amounted to KSh. 11,303,028,876.00 and KSh. 10,704,041,223.55 respectively. 2 B. 2021/22 Fiscal Performance 8. Table 1 presents the fiscal performance for the FY 2021/22 and the deviations from the original and revised budget estimates. Table 1: Deviations from the Initial and Revised Budget Estimates (KES.) Source Targets Revised (1) Revised (2) Actual (KSh) Deviations A B C D F = (D-C) 1. Total Revenue 12,018,610,000 12,867,093,075.56 13,352,112,888.50 11,303,028,876.00 (2,049,084,012.50) Equitable share 8,844,790,000 8,844,790,000 8,844,790,000.00 8,137,206,302.00 (707,583,698.00) Equitable share B/F - - - - Grants 799,270,000 799,265,988 799,261,732 477,623,922.45 (321,637,809.55) DANIDA Grant (Covid 19) - - - - - Grants B/F - 1,353,634,985.60 1,353,634,985.60 1,353,634,985.60 0.00 OSR 2,374,550,000.00 1,869,402,101.96 2,354,426,170.90 1,334,563,665.95 (1,019,862,504.95) OSR B/F - - - - - 2. Total Expenditures 12,018,610,000 12,867,093,075.56 13,352,112,888.50 10,704,041,223.55 (2,648,071,664.95) Recurrent 7,489,706,518.00 8,618,698,659 9,344,768,106 9,261,250,796.45 (83,517,309.55) Development 4,528,903,482.00 4,248,394,417 4,007,344,783 1,442,790,427.10 (2,564,554,355.90) Deviation (1-2) 0.00 0.00 0.00 598,987,652 598,987,652 Source: Narok County Treasury The allocation towards Medical Equipment Services is treated as payment made on behalf of the County Government. And although not received in any year, it accounts for services rendered to the public in respect of the contracted healthcare delivery services. Revenues 9. The cumulative revenue –transfers from the national government and own source revenue - amounted to KES. 11,303,028,876 against the revised estimates of KES. 13,352,112,888.50. This represents 84.65% performance on target. Total transfer from national government was KES. 8,137,206,302.00 while collection from own sources amounted to KES 1,334,563,665.95. The total revenue realized in FY 2021/22 dropped from the targets (printed estimates) by KES. 2,049,084,012.50. The shortfall is attributable to the effects of COVID 19 pandemic. Table 1 shows 3 the comparison between the targets and the actuals. 10. The grants fell short of the revised target by KES. 321,637,809.55. (Table 1). Table 2 further shows the breakdown of the Transfers from the national government. Table 2: A Breakdown of Transfers from National Government in FY 2021/22 (KSh.) RECEIPTS FOR FY 2021/22 TRANSFERS FROM NG Budget Actual Item Variance % Realized Receipts Equitable Share 8,844,790,000 8,137,206,302.00 (707,583,698.00) 92.0% Conditional allocation for - - - - development of village polytechnics Road Maintenance Levy Fund - - - - H. Centre and Dispensaries user fees - - - - Conditional grant -Leasing of 153,300,000 - (153,300,000) - Medical Equipment Loans & Grants-KDSP-Level 1 - - - - Loans & Grants-KDSP-Level 2 141,844,646.00 - (141,844,646.00) - Development Kenya Urban Support Programme- UDG - - - - World bank loan THS 49,785,426.00 49,397,655.45 (387,770.55) 99.22% World bank Loan- National Agri 398,148,737.00 200,872,158 (197,276,579.00) 50.45% & Rural Growth DANIDA Grant -UHDS 17,811,750.00 8,905,875.00 (8,905,875.00) 50.0% Agricultural Sector Development 30,988,725.00 18,291,497.00 (12,697,228.00) 59.03% Support Program (ASDSP) UNFPA -9th County Programme 7,386,704.00 - (7,386,704.00) - Implementation Infrastructure Support from MOH - 200,000,000 - - TOTALS 9,644,055,988 8,614,673,487 (926,851,151) 87.25% Source: Narok County Treasury 11. The Own Source Revenue fell short of the revised target by KES 1,019,862,505.00. Table 3 shows the revenue by sources cast against the targets for FY 2021/22. Maasai Mara Game Reserve recorded the highest revenue, KES 1,073,556,700 amongst the local sources. The collection from all other OSR streams amounted to KES 261,006,966.00 (Table 3). It’s apparent from the foregoing that the performance in revenue collection from Maasai Mara Game Reserve has improved, this was attributed by increase of the number of tourist who visited the National reserve, due to the opening up of the economy after the pandemic. Nevertheless, revenue shortfall from the printed targets is KSh 1,019,862,504.95. 4 Table 3: Local Revenue Sources - County Government of Narok Revenue (KES) Revenue Source Printed Targets Revised Actual Variance FY Targets Revenue FY 2021/2022 2021/2022 A B C D = (C-A) E = (C-B) 1. Single Business 133,500,000.00 27,640,745.00 31,770,371.00 (101,729,629.00) 4,129,626.00 Permits 2. CESS Revenue 176,131,850.00 53,905,844.00 57,510,358.00 (118,621,492.00) 3,604,514.00 3. Markets & 90,000,000.00 14,658,159.00 14,918,398.00 (75,081,602.00) 260,239.00 Slaughter Fees 4. House Rents 20,000,000.00 2,961,319.00 (17,038,681.00) 716,250.00 2,245,069.00 5. Conservancy & 2,200,000.00 1,260,016.00 1,821,000.00 (379,000.00) 560,984.00 Solid Waste Disposal 6. Vehicle Parking 100,000,000.00 7,391,252.00 7,941,182.00 (92,058,818.00) 549,930.00 7. Other CESS 49,068,150.00 21,358,732.00 28,360,072.00 (20,708,078.00) 7,001,340.00 8. Plot Rent 189,590,000.00 56,295,301.00 46,620,587.00 (142,969,413.00) (9,674,714.00) 9. Miscellaneous 105,500,000.00 61,634,991.00 69,103,679.00 (36,396,321.00) 7,468,688.00 Income 10 Mara Game 1,508,560,000.00 2,108,036,062 1,073,556,700 (435,003,300.00) (1,034,479,362.00) . Reserve Total Local 2,374,550,000 2,354,426,171 1,334,563,666 (1,039,986,334) (1,019,862,505.00) Sources Source: Narok County Treasury 12. The local revenue collection was highest in the first quarter of FY 2021/2022 at KES. 420,453,920. It’s also notable that local revenue collection in FY 2021/2022 was lowest in the third quarter at KES 245,355,302. The increase in revenue collection has been attributed to the rise of tourist arrivals to the National reserve, due to reduction of the spread of COVID 19, and hence the opening up of the economy. This largely explains the variance in revenue collection. Table 4 shows the quarterly flow of revenue in FY 2021/22. Table 4: Quarterly Revenue Flows in FY 2021/22 (KSh) Revenue Category 30/09/ 2021 31/12/2021 31/01/2022 30/06/2022 Cumulative CENTRAL GOVERNMENT TOTAL Q1 TOTAL Q2 TOTAL Q3 TOTAL Q4 TOTALS TRANSFERS TOTAL FROM NATIONAL 1,459,390,261 2,211,197,365 2,211,197,365 2,732,888,497.00 8,614,673,488.00 i. Equitable Share 1,459,390,261 2,211,197,365 2,211,197,365 2,255,421,312 8,137,206,303.00 Conditional Grants - - - 477,467,185 477,467,185.00 TOTAL LOCAL SOURCES 420,453,920 318,011,096 245,355,302 350,743,348 1,334,563,666.00 i. Mara Game Reserve 334,090,317 252,315,620 190,888,050 296,262,713 1,073,556,700.00 ii. Other sources 86,363,603 65,695,476 54,467,252 54,480,635 261,006,966.00 5 Revenue Category 30/09/ 2021 31/12/2021 31/01/2022 30/06/2022 Cumulative iii. BF - GRAND TOTAL 1,879,844,181.00 2,529,208,461.00 2,456,552,667.00 3,083,631,845.00 9,949,237,154.00 Source: Narok County Treasury 13. Revenue flow from national government has not been consistent. The irregular flow of revenue had a negative fiscal and financial implication to the county. It impacted on the capacity of the county government to implements projects and programmes and to meet its non- discretionary expenses on time. Expenditure 14. Recurrent expenditure amounted to KES. 9,261,250,796.45 against a revised target of KES. 9,344,768,104.00. Thus, the total expenditure on recurrent at the close of FY 2021/22 represents 99.1% rate of absorption when compared against the revised estimates on expenditures for recurrent. 15. Development expenditure amounted to KSh. 1,442,790,427 compared to a revised target of KSh. 4,007,344,783. This represents 36.00% rate of absorption when compared against the revised estimates on expenditures for development. 16. In overall, expenditure side of the budget had an 89.06% absorption when viewed in terms of approved expenditure estimates and 94.05% when viewed in terms of actual disbursement of funds. In comparison the ratio of recurrent versus development expenditure is 6.4:1. As regards development, total expenditure with respect to revised estimates and actual revenue was 13.48% and 12.76% respectively. Figure 1 shows a comparison between estimates/ targets against the actuals at the close of the financial year. 6 Figure 1: Narok County Government Expenditures on Recurrent and Development (Estimates Against Actuals) Source: Narok County Treasury Overall balance and financing 17. Reflecting on the above performance in revenue and expenditure, the total payment commitments amounted to KSh. 10,704,041,223.55 in FY 2021/22 against the revised estimates of KSh. 13,352,112,887.04. On the other hand, the total revenue realized amounted to KSh. 11,303,028,876.00 against the revised target of KSh. 13,352,112,888.50. In the last financial year (2020/2021), the fiscal performance was KSh. 10,850,579,125.00 in revenue and KSh. 9,496,948,151.40 in expenditure. In comparison therefore, the fiscal performance in FY 2021/22 was better than in FY 2020/21. The performance in the budget execution in FY 2020/21 was adversely effected by the pandemic through the year and particularly the peak seasons of July - December 2020. 18. The main challenges experienced in the financial year under review is the effects of the COVID-19 containment measures, higher-than expected inflation and delays in the receipts of equitable share from the national government. These situations significantly affected timely delivery of service in Narok County. In addition, some budget implementation institutional framework and systems have not been in optimal utilization. Going forward, there is need of 7 strengthening the functions of research, planning, budget formulation and implementation, monitoring and evaluation and reporting on sectoral performance. C. Implication of 2021/22 fiscal performance on fiscal responsibility principles and financial objectives contained in the 2022 CFSP 19. During the period under review, the county government had planned to collect revenue amounting to KSh. 13.352 billion. At the close of the financial year, the county had received revenues amounting to KSh. 11.3 billion. The review of performance in FY 2021/22 reveals that the missed revenue targets were mainly the shortfall of the Local revenue at KSh. 1.019 billion. The overall performance in revenue and expenditure points to the need to adjust the estimates for FY 2022/2023. The adjustments may be executed through supplementary budget for FY 2022/2023. 20. Additional implications borders on the capacity of the county government to implement its budget in FY 2022/23 and in the subsequent years. In view of the foregoing, appropriate measures have been applied in the context of this C-BROP, taking into account the budget outturn for 2021/22. The County Treasury will continue to engage the national government, state agencies and financial experts with a view of improving performance in in view of the effects of the COVID-19 containment measures and higher-than expected inflation triggered by higher global oil and food prices. 8 III. RECENT ECONOMIC DEVELOPMENTS AND OUTLOOK A. Recent Economic Developments Overview 21. The CBROP 2022 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, the IMF global growth is projected to slow down to 3.2 percent in 2022 from 6.1 percent in 2021 (WEO July 2022). 22. 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. 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. Global Scene 23. According to the National Treasury, the 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. 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 and food services, wholesale and retail trade, Professional, administration and support services and financial and insurance. 24. The agriculture sector Activities in agriculture, forestry and fishing sector remained subdued in the first quarter of 2022 mainly attributed to depressed rainfall during the fourth quarter of 2021 as well as delayed onset of rains during the first quarter of 2022, thereby leading to reduced 9 agricultural production. The sector is estimated to have contracted by 0.7 percent in the first quarter of 2022 compared to 0.4 percent growth in the first quarter of 2021. The poor performance of the sector was mainly due to the significant decline in horticultural exports and tea production. The sector’s performance was however cushioned from a steeper slump by the increase in production of cane, milk, and coffee. The sector’s contribution to GDP growth was -0.1 percentage points in the first quarter of 2022 compared to 0.1 percentage points contribution in the same quarter in 2021 Inflation Rate 25. Year-on-year overall 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. Kenya Shillings Exchange Rate 26. 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. Interest Rates 27. Short-term interest rates remained fairly low and stable supported by ample liquidity in the money market. The Central Bank Rate was raised from 7.0 percent to 7.5 percent on 30th May 2022. The tightening of the monetary policy stance was to anchor inflation expectations due to the elevated risks to the inflation outlook as a result of increased global commodity prices and supply chain disruptions. The interbank rate increased to 5.4 percent in August 2022 compared 3.1 percent in August 2021. 10 B. Medium Term Economic Outlook Global Growth Outlook 28. 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. 29. 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. 30. 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 31. 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. 32. 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, 11 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. 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 economic growth projections over the medium term are aligned to those of the Third Medium Term Plan (2018-2022) of the Vision 2030. Partnerships 33. As regards collaborations, the enhanced global partnership proved attractive for increased investment particularly in infrastructure developments. This was mainly through bilateral agreements and increased donor support. There were a number of programmes/projects implemented through support from development partners especially at the national level. They include key roads, the standard gauge Railway, ports, airports, and rural electrification projects. Growth Outlook at County level 34. The County further experienced expansion in building and construction sector attributable to increased demand for housing and business premises. Narok is one of the fast growing towns in the south rift due to its strategic position connecting the south rift to Nyanza. There was expansion in the hospitality industry, wholesale and retail trades which have ready market due to increasing population. Communication continue to be on an upward trend as a result of the proliferation of the service by the main mobile service providers. This has improved the ease of doing business. 35. County government has prioritized key strategic interventions across all departments to accelerate economic growth for social economic transformation and prosperity. The main areas include; increasing agriculture productivity, improved access to quality healthcare particularly immunization, clean water, empowering youth, promoting education and facilitating infrastructural development. 36. The Largest spender in the county for the FY 2021/2022 was Health and Sanitation Featuring the ongoing construction of a new hospital block and medical school at the county referral hospital as well as construction of sub-county hospitals. However, much of the expenditure was on recurrent aggravated by resource allocation to respond to the effects of COVID-19 12 containment measures. The leasing of eleven ambulances and the provision of medicine in public hospitals are ongoing programmes under the recurrent expenditure. The ambulances are a major boost in the attendance of emergency cases. Comprehensive and sustainable strategy to improve the health care system is necessary. 37. To improve the transition and retention rate in secondary schools and colleges the County Government through the county department of Education, Youth and Social Welfare have continued to implement the bursary programme. In addition, the department put in place measures to address the rate of unemployment among the youths and empowerment of women, the county has established youth support programme in this regard. C. Medium Term Fiscal Framework 38. The End-term review of the County Integrated Development Plan (2018– 2022) is in its final stage. The development of the third generation CIDP together with the Fourth Medium Term Plan (MTP IV) are ongoing, both plans will deliberately continue to ensure there is gender parity and management of environment and climate change as an integral part of development. The county government shall adopt a fiscal macroeconomic framework that seeks to address high levels of unemployment and basic support services. 39. The county administration will continue to improve finance management systems at all levels of county government to improve on efficiency of public finance management. This is expected to build investor/creditor confidence to participate in promoting higher growth rates. With respect to revenue, the County Government hopes to maintain a strong revenue effort by sealing existing leakages and strengthening of automation of rates/fees collection points in line using modern technology. The technology is expected to result to improved tax compliance and enhanced administrative measures to enhance the collection of revenue. The County Government will harmonize existing tariffs regimes, offer reliefs incentives and widen the tariff base. 40. In public finance management, the county government shall continue with prudent public finance management. This will help maintain county development expenditure above the 30 per 13 cent threshold provided in the PFM law. On the expenditure side, compliance with PFM Act, 2012 is expected to accelerate reforms in expenditure management system. 41. Significant efforts were made in the FY 2021/22 to boost the Agriculture sector through promotion of value chains courtesy of the NARIG project. This sector is the highest contributor to the county economy. Going forward, strategies to ensure value addition of both agriculture and livestock products such as post-harvest loss prevention were stepped-up in FY 2022/23 budget and over the medium term. 42. During the FY 2021/22 there were several non-core expenditures which were necessary in order to have the county render service effectively and also provide a stable administrative framework. They included construction and refurbishment of offices, purchase of furniture, computers, other office equipment and purchase of vehicles. Moving forward, the departments should consider reallocating resources away from these items without crippling the respective programmes. This policy paper further recommends the reallocation of resources to core, high impact areas of expenditure. 43. As regards Public Service Management, the recommendations in various staff audit reports will be applied in coming up with the best institutional management structures aimed at improving efficiency in service delivery. Growth Prospects 44. The County Government of Narok endeavored to achieve a broad-based expansion touching in all sectors of the economy. Emphasis was given to key sectors of Health and Education development, infrastructural investment, youth empowerment and the supportive service in the administration. 45. Over the medium-term period, the County Government will continue to invest in agricultural infrastructure and equipment to increase productivity in the sector through promoting value addition. The government will continue investing in social-economic sectors of education, health and social protection. Expansion of road networks, and an increase in the access to clean and safe water will also be prioritized. 14 D. Risks to the Outlook 46. The county continues to be susceptible to risks that adversely affects the national fiscal framework and outlook which is influenced by the global macroeconomic context. The emergence of new Omicron COVID-19 variants may occasion restrictive measures. Other risks include high rates of unemployment, growing number of dependents, erratic weather patterns are major threats to performance. 47. Public expenditure pressures particularly the rising wage bill eat into other expenditure thereby compromising the allocation for development expenditure. With the commitment to improve infrastructure within the county, the share of resources going to priority physical infrastructure sector such as Roads, Health, Agriculture, Education and water will increase gradually. The county government will undertake appropriate measures to cushion these pressures to safeguard fiscal stability. 48. Although agriculture is the main driver of the county economy it is faced with unreliable weather patterns. In the recent past, the county has experienced mild drought spells and threat of crop and livestock diseases which has seen significant decline in agricultural produce and livestock. To ensure sustainability of the sector the county will continue to invest in technologies and projects which will reduce overreliance of rain fed production 49. The share of donor funds is expected to shrink in coming years posing a huge risk to programmes that benefit from donor support. For instance, Kenya’s transition to a lower-middle income status has increased the domestic funding obligation for the country’s immunization programme which is largely funded by multilateral donors such as Global Alliance for Vaccine and Immunization (GAVI) through UNICEF. Kenya is now required to achieve full self-funding by 2028. Other funds due for closure includes World Bank Grant for Transforming Health Systems (THS), and DANIDA Grant for Universal Healthcare in Devolved Systems (UHDS). 15 50. The County Government is continually monitoring these risks and taking appropriate fiscal policy measures to strengthen resilience in the economy. To cushion the county against the downsides of the risks emanating from the Covid-19 pandemic, the County Government will collaborate with the National government in implementing the Post Covid-19 Economic Recovery Strategy to protect lives and livelihoods. Additionally, the diversified nature of our economy continues to offer resilience to any global and domestic challenges. 51. On risks emanating from domestic sources, the County Government has laid foundations to enhance faster and lasting growth through the 2022 Annual Development Plan, which will unlock better growth, and positively impact on the lives of people through jobs creation and poverty reduction. This will further be refined once the CIDP 2023-2027 is finalized, in order to integrated emerging issues and needs. Meanwhile, the County Government is promoting value addition in agriculture through interventions such as the inclusive growth projects. Further, the County Government is accelerating infrastructure development to support trade and agriculture and improve access to service centers. The county will also promote expenditure rationalization with a view of reducing wage related pressures thereby creating fiscal space necessary for economic sustainability. Finally, the county government will endeavor to institutionalize a resource mobilization strategy within the framework of PFM Act 2012 IV. RESOURCE ALLOCATION FRAMEWORK A. Adjustment to 2022/23 Budget 52. Adjustments to the 2022/23 budget will take into account the actual performance of expenditure so far and absorption capacity in the remainder of the financial year. The focus will be on accelerating the absorption of available resources in the implementation of programmes and projects. Measures will also be put in place to improve the collection of own source revenue. 16 53. Table 6 provides a reflection in the C-BROP 2022 of the proposals for fiscal adjustments for FY 2022/23 and projections for FY 2023/24. Table 6: Fiscal Projections for 2022/2023 - 2023/2024 (KSh) Adjustments of FY2022/2023 FY2023/2024 Revenue by Estimates Actual Projections Source/Stream FY2021/202 FY2021/202 CFSP’22 C-BROP’22 CFSP’23 2 2 REVENUE 13,352,112,888.50 11,303,028,876.00 12,109,230,000.00 12,469,037,652 12,875,961,378.00 i. Equitable Share 8,844,790,000.00 8,137,206,302.00 8,844,790,000.00 8,844,790,000 9,064,310,000.00 ii. Equitable Share - - - (B/F) iii. Grants 799,261,732.00 477,623,922.45 833,610,000.00 833,610,000.00 896,030,000.00 iv. Grants B/F 1,353,634,985.60 1,353,634,985.60 - - - v. OSR 2,354,426,170.90 1,334,563,665.95 2,430,830,000.00 2,191,650,000 2,915,621,378.00 vii. B/F Others - - - 598,987,652 - EXPENDITURE 13,352,112,889.00 10,704,041,223.55 12,109,240,000.00 12,469,037,652 12,875,961,378.00 Recurrent 9,344,768,106 9,261,250,796.45 8,208,880,000.00 8,715,857,318.75 8,884,413,350.82 Development 4,007,344,783 1,442,790,427.10 3,900,360,000.00 3,753,180,333.25 3,991,548,027.18 Source: Narok County Treasury 54. As shown in table 6, the revenue projections for Narok County will be informed by the revised fiscal targets which will be firmed up in the context of the County Fiscal Strategy Paper 2023. The County Government will continue to maintain fiscal responsibility principles by making necessary adjustments to meet financial objectives during the implementation of the budgetary plans for FY 2023/24 and over the medium-term period. Adjustment on Revenue 55. The recommended adjustment is in accordance with the overall performance in FY 2021/22 and the reality with regard to the financial environment with the impact of COVID 19. We expect an increase performance in OSR in FY 2022/2023 especially in the 1st quarter, which coincides with peak season for tourists visit to Maasai Mara game reserve. Maasai Mara revenue stream accounted for 80.4% of own source revenue in FY 2021/2022. The 1st quarter accounted for 31.1% of the total collection against this stream alone. Business activities related to this stream is relatively recovering from the impact of COVID 19. 17 56. Equitable share informed by the Senate resolution to maintain FY 2022/23 equitable share at the level precedent in FY 2021/22. The allowance for balances of grants brought forward is predicated on the roll over nature of the grants in that the funds do not expire but is carried over in successive financial years. The share of expenditure between recurrent and development has been informed by performance in FY 2021/2022 and the need to adhere to fiscal responsibility principles dictated in PFM Act 2012. Adjustment on Expenditure 57. Resources earmarked for development purposes will be utilized for development projects. Utilization of public finances, resource allocation and utilization in the remainder of the financial year will be guided by the following. i. Ongoing projects ii. Priorities in the CIDP 2018-2022 iii.Emerging priorities like strategies to accommodate the Manifesto/Agenda of the Governor iv. Compliance with the PFM law B. Medium-Term Expenditure Framework 58. With the County Government’s commitment in improving infrastructure countywide, the share of resources going to priority physical infrastructure sector, such as roads, early childhood development centers, health facilities, Immunization, water infrastructure amongst others will continue to rise over the medium term period. This will help the sector provide quality and reliable services. 59. The priority social-economic sectors will continue to receive adequate resources to promote development. The Health, Education and social service sectors will receive significant share of resources in the budget in coming years. The sector actors are thus required to utilize the allocated resources more efficiently in order to generate fiscal space to accommodate other strategic interventions like disease outbreaks and improved productivity per man hour. 18 60. The economic sectors including agriculture and livestock will receive increasing share of resources to boost agricultural productivity with a view to promote value addition and deal with threats in food security in the county. In addition, the priority programmes under tourism, wildlife, trade, industry and cooperatives will be allocated adequate resources based on programme based budgeting. 61. Further, the county government will adopt an aggressive intervention to fill anticipated gap in donor funding by applying a targeted scaling-up of budgetary allocation towards the affected programmes including immunization. This is informed by the fact that Kenya’s transition to a lower-middle income status has increased the domestic funding obligation for the country’s immunization programme, which is now required to achieve full self-funding by 2028. There is therefore need to undertake an incremental budget allocation to health and to immunization as early intervention measure. C. 2023/24 Budget framework 62. The 2023/24 budget framework is set against the backdrop of the medium-term macro- fiscal framework set out in this document and the County Government’s strategic objectives that will be outlined in a number of policy documents and plans that will be coming up in the course of FY 2022/23 and coming years. Key amongst these includes Constitution of Kenya 2010, the National Government Agenda that will be espoused in the Fourth Medium Term Plan (MTP IV) of the Vision 2030, County Integrated Development Plan (2023-2027), National Sector Plans, Sustainable Development Goals (SDGs), Narok County COVID-19 Social Economic Re-Engineering Recovery Strategy, to mitigate against the impacts of COVID 19 pandemic, and the CFSP 2023 and other agreed development policies. Revenue Projections 63. The 2023/24 budget targets internal revenue collections of KSh. 2,915,621,378.00 and transfers national government amounting to KSh. 9,064,310,000.00. These projections are revenue based and will be underpinned by national government policy guidelines and reforms and county revenue raising measures espoused in the corresponding Finance Act. As such, total revenues projection is KSh. 12,875,961,378.00. 19 64. The projection is based on the promises of the reopened economy resilience of the citizens following a period of restrictions in accordance with the Ministry of Health protocols to combat COVID 19. In this regard the County has already put in place viable revenue raising strategies for enhancing revenue collection in critical revenue streams with a view of ensuring that the revenue target is met. Further, the intervention by the National Government to scale-up efforts to boost the tourism sector by promoting aggressive post Covid-19 tourism marketing and providing support for hotel refurbishment through soft loans will reinvigorate the tourism sector in Narok county. 65. The resumption in tourism activities and related business is expected to raise the revenue prospects for Narok County leading to the attainment of the set targets. However, the modest projection takes into account the full reopening of the economy which has necessitated the recovering of most business and hence the target of Ksh.2.91 billion FY 2023/24. 66. The law provides for several sources wherefrom counties can generate revenues namely, transfers from national government (Article 202 & 204), local collection and borrowing (Article 212). The sources of revenue for Narok County Government in the past three years have been from all of the above sources except borrowing. Hence, although the County Government envisages maintaining a balanced budget where total revenue equal total expenditure, the County Government may consider borrowing should need arise. In doing so, the county government will ensure that borrowing guidelines contained in Treasury Circular No.1/2021 are adhered to. 67. In the 2023/24 budget, overall expenditure is estimated at KSh 12,875,961,378.00. The recurrent expenditure is estimated at KSh. 8,755,653,737.04 while developments vote will carry KES. 4,120,307,640.96. The allocation for development is 32%, which is above the minimum set out in the PFM Act 2012 and in other recommended best practices. 68. Preliminary ceilings for FY 2023/24 are therefore provided, (Table 7) to guide sectors in the preparation of sector reports. The ceilings will be firmed in County Fiscal Strategy Paper (2023) which will be prepared on the basis of the priorities and programme incorporated in the third generation County Integrated Development Plan (CIDP) for the period 2023-2027. 20 Table 7: Tentative Ceilings for FY 2023/24 (KSh) Departments Recurrent Development Total Rec & Dev % Share of Allocation County Assembly 865,420,080.23 100,214,619.00 965,634,699.23 7.50% Office of The Governor 160,420,289.07 160,420,289.07 1.25% Treasury, Economic Planning, and ICT 828,405,340.53 294,660,311.30 1,123,065,651.83 8.72% County Transport, Public Works and infrastructure 382,439,476.11 695,276,584.55 1,077,716,060.66 8.37% Education Youth Affairs, Sports Culture and Social services 1,289,594,916.09 533,444,729.38 1,711,108,847.18 13.29% Environment & Natural Resources 286,099,584.54 238,596,882.05 524,696,466.58 4.08% County Public Service Board 106,946,859.38 106,946,859.38 0.83% Agriculture, Livestock and Fisheries 349,441,303.12 533,444,729.38 882,886,032.50 6.86% County Health and Sanitation 2,741,156,730.28 1,277,467,319.89 4,018,624,050.17 31.21% Lands, Housing, Physical Planning & Urban Development 247,365,107.95 220,142,565.67 467,507,673.62 3.63% Tourism and Wildlife 470,665,441.26 129,780,626.14 600,446,067.41 4.66% County Administration and Public service Management 895,417,370.05 165,054,805.20 1,060,472,175.24 8.24% Trade and Industrialization 132,281,238.43 44,155,266.69 176,436,505.12 1.37% Totals 8,755,653,737.04 4,120,307,640.96 12,875,961,378.00 100.0% 21 V. CONCLUSION AND WAYFORWARD 69. The fiscal outcome for 2021/22 together with the updated fiscal projections has had implication of the financial objectives elaborated in the County Integrated Development Plan and the fiscal responsibility principles outlined in the PFM law. The outcome is a testimony of the continuation of the pursuit for prudent fiscal policy through the reorientation of expenditure toward priority programmes within the mandate of the County Government. 70. All Sector Working Groups are required to make reference to the sector ceiling provided here above in the drafting and submission of sector budget proposals within the timelines of the budget calendar for FY 2023/2024. The departments should adhere to programme based budgeting in allocating resources and adopt strategies that improves the rate of absorption going forward. The next County Fiscal Strategy Paper due in February 2023 shall firm up the baseline expenditure ceilings proposed in this paper. 71. Ultimately, County Integrated Development Plan (CIDP) for the period 2023- 2027 and the Annual Development Plan (ADP 2023/2024) and the sectoral plans shall continue to advise the priorities in resource allocation in the coming years ANNEX I: BUDGET CALENDAR Obligation of Members of the Activity Responsibility Timeframe/Deadline Public Read to know when, where and 1. Issue guidelines for preparation of CEC Finance By 30th August, 2022 how to participate in the 2023/24 and MTEF County Budget & Planning budget process CEC for Submission of Annual Development st Read the plan, and can submit 2. Finance and By 1 September Plan (ADP 2023/24) to the County written Memorandum Economic 2022. Assembly Planning Undertaking of Departmental Expenditure Reviews and submit to 3. All 8th - 14th September, County Treasury ensuring that Departments 2022 ecological, social, environmental and institutional issues are highlighted Estimation of Resource Envelope and 4. Preliminary allocation to sectors for County 15th – 28th September, preparation of County Budget Review Treasury 2022 and Outlook Paper (CBROP 2022) 22 Obligation of Members of the Activity Responsibility Timeframe/Deadline Public Submission CBROP to the County 5. County By 30th September, Executive Committee for deliberation Treasury 2022 and approval Deliberation and approval of CBROP County 6. 2022 by the County Executive Executive 3rd - 7thOctober 2022 Committee Committee CEC for Submission of County Budget Review 7. Finance and By 14th October, and Outlook Paper(CBROP 2022) to Access, Read and comment. Economic 2022 the County Assembly Planning Launch of Sector Working Groups and All By 18th October, 2022 Physical Presence, giving input, Start of Sector Consultations ensuring Departments- suggestions, opinions, 8. that ecological, social, environmental Finance and reviews of content through oral and institutional issues are highlighted planning to co- or written memorandum, or (un) ordinate solicited feedback on access to service and quality Sector consultative forums and Drafting of Sector Reports ensuring Sector 9. 24th Oct – 30th Nov, that ecological, social, environmental Working Access, Read and comment. 2022 and institutional issues are well Groups addressed Submission of final sector reports to All CECs for 10. County Treasury ensuring that their By 30th November, Access, Read and comment. ecological, social, environmental and respective 2022 institutional issues are well addressed. Departments Physical Presence, giving input, suggestions, opinions, CEC Finance 11. By 16th December reviews of content through oral Finalization of CIDP 2023-2027 and Economic 2022 or written memorandum, or (un) Planning solicited feedback on access to service and quality Physical Presence, giving input, suggestions, opinions, 12. County By 10th February reviews of content through oral Public Consultative Forums Treasury 2023 or written memorandum, or (un) solicited feedback on access to service and quality Drafting of County Fiscal Strategy Paper (CFSP 2023) ensuring that 13. County By 17th February, ecological, social, environmental and Access, Read and comment. Treasury 2023 institutional issues are well addressed Submission of County Fiscal Strategy CEC Finance 14. By 17th February, Paper (CFSP 2023) to County and Economic 2023 Executive Committee for approval Planning 15. Submission of the CFSP to County County By 28th February, Access, Read and comment. Assembly Treasury 2023 Circulate approved County Fiscal 16. Strategy Paper (CFSP 2023) and Final County By 15th March, 2023 Access, Read and comment. guidelines on preparation of 2023/24 Treasury MTEF Budget Submission of budget proposals for All 17. 2023/24 MTEF Budget to County Accounting By 22nd March, 2023 Treasury Officers 18. Consolidation of Budget Estimates for County By 13th April, 2023 Access, Read and comment. F/Y 2023/2024 Treasury 23 Obligation of Members of the Activity Responsibility Timeframe/Deadline Public Submission of Budget Estimates F/Y 19. County 2023/2024 to County Executive for By 17th April, 2023 Treasury approval 20. Presentation of Budget Estimates to C.E.C Finance By 30th April, 2023 County Assembly & Planning Physical Presence, giving input, Review of Budget Estimates and public suggestions, opinions, 21. consultations ensuring that ecological, County By 17th reviews of content through oral May,2023 social, environmental and institutional Assembly or written memorandum, or (un) issues are well addressed solicited feedback on access to service and quality 22. Report on Draft Budget Estimates F/Y County 24th May, 2023 Access, Read and comment. 2023/2024 From County Assembly Assembly 23. Consolidation of the final Budget County By 31st May 2023 Estimates Treasury 24. Submission of Appropriation Bill to County By 23rd June 2023 County Assembly Treasury 25. County Budget Statement/Speech By 30th June 2023 Access, Read and comment. Treasury 26. County Appropriation Bill Passed By 30th June, 2023 Assembly Physical Presence, giving input, suggestions, opinions, 27. Performance Review, Monitoring and All reviews of content through oral May and June 2023 Evaluation. departments or written memorandum, or (un) solicited feedback on access to service and quality ANNEX II: MTEF Sectors Classification in Narok County S/No. MTEF SECTORS MDAs 1. Agriculture Rural and Urban Development ▪ Agriculture (Crop development) ▪ Livestock development and fisheries ▪ Veterinary Services Department ▪ Land, Housing and physical Planning ▪ Town Management Committee 2. Energy, Infrastructure And ICT ▪ Public works department ▪ County roads and transport ▪ Information, communication and e- government 3. Public Administration And International ▪ Office of the Governor Relations (PAIR) ▪ County Public Service Management ▪ Office of County Secretary ▪ County Public Service Board ▪ County Assembly ▪ County Assembly Service Board ▪ Governor and County Executive Services 24 S/No. MTEF SECTORS MDAs 4. General Economic, Commercial And Labour ▪ Trade and industrialization Affairs (GECLA) ▪ Cooperative development, ▪ Tourism & wildlife 5. Social Protection, Culture And Recreation ▪ Education ▪ Youth affairs ▪ Sports and Talent Development ▪ Culture & social services 6. Environmental Protection And Water ▪ Environment Conservation and Management ▪ Water and Irrigation ▪ Energy and natural resources 7. Health ▪ Health and Sanitation 8. Macro Working Group ▪ County Treasury ▪ County Economic Planning ANNEX III: FORMAT FOR PRESENTATION OF PROGRAMME- PERFORMANCE BASED BUDGETS (PBB) Vote No.: Vote Title: Part A: Mission Part B: Vision Part C: Context for Budget Intervention 25 This section is supposed to be a review of MTEF period 2020/21 – 2022/23 and should briefly discuss the following • Expenditure trends; • Major achievements for the period; • Constraints and challenges in budget implementation and how they are being addressed; and • Major services/outputs to be provided in MTEF period 2023/24 – 2025/26 (the context within which the budget is required) Part D: Programme Objectives/Overall outcome (List all the programmes and their strategic objectives. Please note that each programme must have only one strategic objective/outcome) Part E: Summary of the Programme Outputs and Performance Indicators for FY 2023/24 -2025/26 Programme Delivery Key Key Baseline Proposed Targets Unit Outputs Performance 2022/23 Estimate (KO) Indicators 2023/24 (KPIs) 2024/25 2025/26 Name of Programme Outcome: SP1.1 SP.2 … SP.N Part F: Summary of Expenditure by Programmes, 2023/24 -2025/26 (KSh. Millions) 26 Programme Estimates Proposed Projected Estimates 2022/23 Estimates 2024/25 2025/26 2023/24 Programme 1: (State the name of the programme here)1 Sub Programme (SP) SP 1. 1 SP 1. 2. … N Total Expenditure of Programme 1 Programme 2: (State the name of the programme here) SP 2. 1 SP 2. 2. … N Total Expenditure of Programme 2 Total Expenditure of Vote ------- Part G. Summary of Expenditure by Vote and Economic Classification2 (KSh. Million) Expenditure Classification Estimates Proposed Projected Estimates 2022/23 Estimates 2024/25 2025/26 2023/24 Current Expenditure Compensation to Employees Use of goods and services 1NB. Repeat as shown in the Table under section “E” above for all Programmes. Provide total expenditure for each programme and their summation must equal the total expenditure of the vote. 2 The total current expenditure and capital expenditure must be equal the total expenditure vote given in tables E, F, & G. 27 Expenditure Classification Estimates Proposed Projected Estimates 2022/23 Estimates 2024/25 2025/26 2023/24 Current Transfers Govt. Agencies Other Recurrent Capital Expenditure Acquisition of Non-Financial Assets Capital Transfers to Government Agencies Other Development Total Expenditure of Vote …… Part H. Summary of Expenditure by Programme, Sub-Programme and Economic Classification (KSh. Million) Expenditure Classification Estimates Proposed Projected Estimates 2022/23 Estimates 2024/25 2025/26 2023/24 Programme 1: (State the name of the programme here) Current Expenditure Compensation to Employees Use of goods and services Current Transfers Govt. Agencies Other Recurrent Capital Expenditure Acquisition of Non-Financial Assets 28 Expenditure Classification Estimates Proposed Projected Estimates 2022/23 Estimates 2024/25 2025/26 2023/24 Capital Transfers to Govt. Agencies Other Development Total Expenditure Sub-Programme 1: (State the name of the Sub-Programme here) Current Expenditure Compensation to Employees Use of goods and services Current Transfers Govt. Agencies Other Recurrent Capital Expenditure Acquisition of Non-Financial Assets Capital Transfers to Govt. Agencies Other Development Total Expenditure ▪ Repeat as above in cases where a Ministry/Department has more than one programme and/or sub-programmes ANNEX IV: SECTOR WORKING GROUP REPORT FORMAT TABLE OF CONTENTS (Please ensure that Headings and Sub-headings are identical to those in the report) 8 Chapters 1 – 4 should form the main body of the report and should be divided into logical sections and subsections, using appropriate headings and numbering. Its purpose is to explain the conclusions and to justify the recommendations. 29 EXECUTIVE SUMMARY (Restate conclusions for each section and summarize findings and recommendations under this section) CHAPTER ONE: 1. INTRODUCTION 1.1. Background 1.2. Sector Vision and Mission 1.3. Strategic goals/Objectives of the Sector 1.4. Sub–Sectors and their Mandates 1.5. County Corporations 1.6. Role of Sector Stakeholders (The introduction should briefly describe context; identify general subject; describe the problem or issue to be reported on; define the specific objective for the report; outline the scope of the report; and comment on any limitations of the report) CHAPTER TWO 2. PERFORMANCE REVIEW 2020/21 – 2022/23 30 2.1. Performance of sector Programmes – delivery of outputs 2.2. Review of Key indicators of Sector Performance 2.3. Expenditure Analysis 2.3.1. Analysis of programme expenditure 2.3.2. Analysis of programme Expenditure by economic classification 2.3.3. Analysis of capital projects by Programmes 2.4. Review of Pending Bills 2.4.1. Recurrent Pending Bills 2.4.2. Development Pending Bills CHAPTER THREE 3. MEDIUM TERM PRIORITIES AND FINANCIAL PLAN FOR THE MTEF PERIOD 2023/24 – 2025/26 3.1. Prioritization of Programmes and Sub-Programmes 3.1.1. Programmes and their Objectives 3.1.2. Programmes, Sub-Programmes, Expected Outcomes, Outputs, and Key Performance Indicators for the Sector 3.1.3. Programmes by Order of Ranking 3.2. Analysis of Resource Requirement versus allocation by: 3.2.1. Sector (recurrent and development) 3.2.2. Sub-Sectors (recurrent and development) 3.2.3. Programmes and Sub-programmes 3.2.4. Semi-Autonomous Government Agencies 31 3.2.5. Economic classification 3.2.6. Resource Allocation criteria CHAPTER FOUR 4. CROSS-SECTOR LINKAGES AND EMERGING ISSUES CHALLENGES CHAPTER FIVE 5. RECOMMENDATIONS This section should outline future actions. The Recommendations should be action orientated, and feasible; Relate logically to the Conclusions; be arranged in order of importance; and be to the point CHAPTER SIX 6. CONCLUSION This section should summarize the key findings of the report, as outlined in the discussion under the chapters 1-5 of the report. The Conclusions should relate specifically to the report’s objectives (as set out in the introduction); identify the major issues; be arranged in order of importance; be specific, and to the point; and be a list of numbered points REFERENCES This section should list the sources referred to in the report APPENDICES Appendices should contain information that is too complex to include in the report. You need to direct readers to this information, as in “Appendix A provides an overview of the Budget of Department X 32 ANNEX V: FORMART FOR PRESENTIG PROJECT DETAILS FOR FY 2023/2024 AND THE MEDIUM-TERM BUDGET Department …………………………………………………….. Project Financing Timelines Project Annual Outstanding Project Budget Allocation Projection Projection Code Status Cumulative project Cost Completion FY for FY for FY for FY Project Expenditure as at End of % as at end 2022/23 2023/24 2024/25 2025/26 Title as at End of June 2023 of June 2023 June 2023 Estimat CGN/ Foreign Start Expected ed Cost GOK Date Completion of the date Project 33 ANNEX VI: FORMART FOR OUTCOME BASED PROJECT REPORTING Department …………………………………………………….. Name of Location Baseline Objective Project Description Estimated Cost. Start Achievements Comments (List the Programme/ of Status (Scope, what was KSh Date Output. (Status Outcome. auxiliary benefits, Project project intended to be done) (MM/YY) of Completion. (Measured Challenges and Include % where against recommendations applicable) objective) 34 ANNEX V: TIMELINE FOR TABLING COUNTY BUDGET DOCUMENTS IN THE COUNTY ASSEMBLY AND RELEASE TO THE PUBLIC– CPP GUIDELINES 2015 Document Contents of the Document Date Due in Deadline for Action Rationale for Public Release Publication (What the County by the County Information/ MCAs should look out for Assembly Assembly Input by the before Public (approving) the document) Budget • Timelines for various 30 August For the information of The document is critical for the To be publicized Circular activities; members especially public to know when, where within 7 • Procedures for review and in scheduling their and how to participate in the days of projection of revenues and annual calendar budget process publication expenditures; • Key policy areas to be taken into consideration; • Procedures for public consultation; and • Format for budget Documentation County • Strategic priorities for the 1 September No date provided but The plans will go through three 14 days before Integrated medium term; should be within 14 main stages adoption in Development • Programmes to be delivered; days Action: To debate a. Formulation by the County the County Plans (CIDP)/ • Significant capital and approve with or Planning Unit Executive and Annual expenditure; and without amendments b. Approval by the County then tabling in Development • Grants, transfers and Executive the CA Plans1 subsidies to be made on behalf c. Tabling and approval in the To be publicized of County Governments. County Assembly within 7 In each of these stages there is days of tabling in need to share with the public the CA the documents whether as draft especially in stage (a) and (b) Budget Review • Actual fiscal performance in 30 September Action: For The County Treasury will 14 days before and Outlook the previous year; Information of prepare the BROP and it is tabling Paper (BROP) • Updated economic and Members important that before they table in the County financial forecasts from the it in the County Executive the Executive recent Budget Policy Public be given an opportunity committee (with Statement; to comment. 7 days • Identification of broad policy Thereafter when the final allowed for input) priorities to be implemented by document is approved and To be publicized the CG in the medium term; tabled in the County Assembly within 7 • Provide indicative available it should also be published and days of tabling in resources (i.e. ceilings) to fund publicized within 7 days the CA CG priorities-in consultation with CRA and the National Treasury; and • Reasons for any deviations from the financial objectives in the CFSP County Fiscal • Broad strategic priorities and 28 February 15 March Same applies with the BPS and 7 days before Strategy Paper policy goals- medium term and Action: To debate and CBSP. There is need that before tabling in the (CFSP) long term. Approve the County Executive approves County Executive • Outlook on expenditures, it that the public be given an To be publicized revenues and borrowing for the opportunity to input. 7 days after medium term Thereafter when it is tabled in tabling in the CA the County Assembly it should be made public Finally what the County Assembly approves (with or without amendments) should be made public too for greater certainty Debt (a) the total stock of debt as at 28 February Action: For It is important that the public Management the date of the statement; information of know the debt obligations Strategy (b) the sources of loans made members in decision facing them and what strategies to the county government; making on the the county is taking to address (c) the principal risks liabilities of the them associated with those loans; county (d) the assumptions underlying the debt management strategy; 35 Document Contents of the Document Date Due in Deadline for Action Rationale for Public Release Publication (What the County by the County Information/ MCAs should look out for Assembly Assembly Input by the before Public (approving) the document) and (e) An analysis of the sustainability of the amount of debt, both actual and potential. Budget Details of all planned 30 April 30 June The public need to see what is 7 days after Estimates development and recurrent Action: To debate tabled in the County Assembly. tabling in the (Revenue and expenditures of the and approve This should also be CA with 14 days Expenditure) government. Also the with or without complemented by clear dates of public Appropriation estimated revenues by source amendments (Not later than May 30) as input Bill and explanation of strategies To pass the to when the public can give for deficit financing appropriations feedback to the departmental bill to authorize committees (on sector specific withdrawals from the matters) or to the Budget and County Revenue Fund Appropriation Committee Budget and Same as above By 30 June Once all has been discussed To be publicized Appropriation and the final budget approved 7 days Act it should be made public via after approval in the appropriations act and the County detailed programme/itemized Assembly budget documents on the day it is approved but not later than 7 days Supplementary Revised Budget Estimates On needs All supplementary budget 14 days before Budget Basis estimates and the rationale tabling in the Documents for the same should be availed CA and 7 days before they are tabled in the after tabling respective CA and thereafter in the CA when they are tabled in the house Finance Bill Taxation and other revenue 30 September Action: To debate There is need that the public 14 days before and Act raising measures of the county (Within 90 and approve with or have an opportunity to input tabling in government Days) without amendments into the Finance Bill before it is the CA and 7 tabled at the County Assembly; days after Further the public should also approval in the be allowed space by the Finance CA Committee to contribute before the respective house approves it Expenditure An in-depth analysis on No Specific Action: For Review specific Date information of Reports sectors to establish the progress members (or lack of it) by the county Audit Reports An independent opinion on the 31 December 2 months use of public funds in the Action: To debate county (both the County and decide on what Executive and County actions should be Assembly) taken Source: County Public Participation (CPP) guidelines 2015 36