Classification of public expenditure in Kenya
Under Kenya’s public finance system, expenditure is classified as listed below:
- Recurrent expenditures,
- Development expenditures and
- Transfer Payments
Recurrent expenditures are those allocations aimed at meeting state operations, e.g. payment of salaries and wages, transport costs, operating expenses, and maintenance of equipment among others.
These are expenditures provided for in the Constitution of Kenya or other laws of the land. These are directly paid from the Consolidated Fund Services. Example, Debt payments (both principles and interest), salaries and wages of constitutional office holders, pensions.
The non-discretionary expenditures are also referred to as mandatory expenditures. These expenditures are the first to be paid by the state or any other spending agency.
Discretionary expenditures are those allocations used by various spending agencies to produce goods and services. These aren’t decided by the the law and therefore, they can be varied either way depending on availability of resources.
Transfer payments on the other hand are those resources transferred from one government department to another agency. For instance, transfer of resources to be used for payments under social security.