President William Ruto’s administration plans to raid taxpayers for an additional Sh361.80 billion to fund his second full-year budget. File Photo/AFP
By Business Daily Africa
President William Ruto’s administration plans to raid taxpayers for an additional Sh361.80 billion to fund his second full-year budget, which is set to cross the Sh4 trillion mark for the first time.
The draft Budget Policy Statement (BPS) for the year starting July 2024 shows the Treasury intends to increase the budget to nearly Sh4.2 trillion from the Sh3.9 trillion revised estimates for the current fiscal year.
The current budget was recently raised from the Sh3.72 trillion originally approved, as the Treasury sought to accommodate the increased cost of running the government and additional debt repayments after the shilling weakened than earlier projected. Treasury Cabinet Secretary Njuguna Ndung’u projects ordinary revenue receipts — comprising taxes, levies, rent of buildings, fines, and forfeitures— will rise to nearly Sh2.96 trillion from Sh2.60 trillion for the current fiscal year.
“Revenue performance will be underpinned by the ongoing reforms in tax policy and revenue administration measures geared towards expanding the tax base,” Prof Ndung’u wrote in the draft 2024 BPS.
The deficit in the budget — usually bridged through borrowing— is projected at Sh703.9 billion for the year starting July 2024, a drop of 13.6 percent from Sh814.7 billion estimates for the current fiscal year.
The Treasury plans to raise Sh377.7 billion from the domestic market, while the remaining Sh326.2 billion will be borrowed from abroad.
“In light of the increased cost of financing, the government will continue monitoring the global financial market conditions before accessing the international capital market for any liability management operations. The government will also explore other alternative sources of financing, including climate change financing options, Debt for Nature Swaps, Samurai and Panda bonds if the market and macroeconomic environment allow,” the Treasury says in the draft BPS.
“More emphasis will be [put on maximising] concessional loans while non-concessional and commercial external borrowing will be limited to economic enabler projects that cannot secure concessional financing and are in line with the Bottom-Up Transformational Agenda of the government.”
Dr Ruto in October directed ministries and State agencies to cut their budgets by 10 percent, citing Kenya’s tight financial position.
He has further warned that corruption and wastage of public funds will not be tolerated.
In the proposed expenditure ceilings for the next financial year, the budget for the Executive arm of the government has been capped at Sh2.44 trillion, a marginal 1.62 percent rise from Sh2.4 trillion originally approved by lawmakers in June.
Parliament’s budget will increase 2.16 percent to Sh41.62 billion, while the Judiciary’s will rise 3.98 percent to Sh23.69 billion if the draft BPS is approved by the legislators.
Expenditure on priority payments under the Consolidated Fund Services, largely debt servicing costs, have been raised 36.90 percent to Sh1.19 trillion in the draft BPS compared with Sh869.34 billion originally budgeted for the current fiscal year ending June 2024.
The equitable share of revenue in the 47 counties is proposed at Sh401.64 billion for the review fiscal year 2024/25, an increase of 4.21 percent over Sh385.42 billion in the prevailing year.
“There is a need for continuous rationalisation of expenditures by eliminating non-core expenditures while improving efficiency in development projects implementation so as to contain expenditure growth, stabilise debt and reduce debt vulnerabilities,” the Treasury wrote in the BPS.