NAIROBI, Kenya – The International Budget Partnership Kenya (IBP Kenya) has issued a stern reminder to the government: utilize resources as intended or risk the failure of the revised 2024-25 budget and accompanying austerity measures.
As the Supplementary Estimates (No.1) for the financial year 2024-2025 undergo public scrutiny, Parliamentary departmental committees are actively engaging with Ministries, State Departments, and Agencies to review these crucial financial documents.
The Budget and Appropriations Committee has a critical role in guiding this process, soliciting public input, and reporting to the House by July 24.
This will enable the National Assembly to consider the Supplementary Estimates and the necessary Appropriation legislation, crucial for implementing the Revised Fiscal Framework and proposed expenditure reductions.
The National Treasury has been compelled to revise its expenditure plans for the current financial year, ending June 30 next year, following the withdrawal of the Finance Bill 2024.
This bill aimed to raise an additional Sh344.3 billion, but President William Ruto declined to assent to it amid public protests.
In response, the Treasury has proposed reducing the 2024-25 budget from Sh3.99 trillion to Sh3.87 trillion in its Supplementary Budget.
The revised revenue target, including collections by the Kenya Revenue Authority (KRA), is set at Sh2.9 trillion, down from Sh3.3 trillion.
Consequently, major projects face Sh122 billion in funding cuts, along with reductions in allocations to the executive, judiciary, parliament, and counties.
“I direct that operational expenditure in the Presidency be reduced to remove allocations for the confidential vote, reduce travel budget, hospitality and buying of vehicles, renovations and other expenditures,” President Ruto stated when he declined to sign the Finance Bill on June 26.
President Ruto also instructed Parliament, the Judiciary, and county governments to collaborate with the National Treasury to undertake budget cuts, emphasizing his advocacy for “Living within our means.”
Budget experts stress that the government must ensure prudent Public Finance Management to make the revised plan effective.
Failure to do so could see the country’s budget deficit widening to Sh954.8 billion, up from the anticipated Sh610.5 billion for the 2024-25 fiscal year.
“There is a need for better use of resources and spending on areas that positively impact the economy. While we cannot change past mistakes, we can make a difference moving forward by safeguarding the future,” IBP Kenya executive director Abraham Rugo stated during a forum on austerity measures.
The forum called for increased public participation in the budget-making process and proper use of public resources.
The past decade in Kenya has seen minimal concerted austerity measures, with budget deficits steadily increasing.
Issues of fiscal indiscipline and embezzlement of public resources have persisted, despite the government’s continued borrowing to bridge budget gaps.
The government is also tasked with eliminating wastage in state agencies by cutting duplications and sealing loopholes used for embezzlement.
To combat these issues, experts urge the national government and counties to adhere strictly to Public Finance Management rules, ensuring that public resources are collected, allocated, spent, and accounted for efficiently.
Official data indicates that Kenyans have been missing out on development due to low budget absorption at both national and county levels, compounded by poor Public Finance Management.