President William Ruto on Wednesday said the government would freeze Sh200 billion worth of projects following withdrawal of the controversial Finance Bill 2024, extending a streak of poor spending on growth, despite mounting taxes.
The amount is more than a quarter (27 per cent) of the budgeted development spending for the 2024/25 fiscal year - Sh745.9 billion - which shows the impact it will have on key projects in roads, housing, education, agriculture and manufacturing sectors.
“Minus the Finance Bill, 2024, it means that we will have to cut down on some of the development programmes amounting to Sh200 billion, delay them and some of them will have to wait for next year. We will try to find some money next year, we will have to cancel some of them because that is the nature of things and it is because the people of Kenya have spoken loudly that they want a leaner budget for us as a country,” said President Ruto.
During the financial year starting July, the government has prioritised expenditure on development projects including Sh193 billion on roads, health (Sh127 billion), housing (Sh92 billion), and agriculture (Sh54 billion).
But while President Ruto blames the shelved Finance Bill for the Sh200 billion budget cut on planned projects, analysis shows that the State has persistently fallen short of implementing development projects even under the current Finance Act, 2023 that introduced a raft of taxation measures.
By the end of May- just a month to the close of the financial year- the national government had only spent Sh261 billion on development projects, out of the originally planned Sh480 billion.
“We continue to witness external shocks and recurrence of extreme weather events that not only affect economic activities but also pose major fiscal risk,” Treasury Cabinet Secretary Njuguna Ndung'u stated while delivering the 2024/25 budget proposals in parliament.
This means that a month to the end of the financial year, the government had spent just above half of the development allocation, despite additional taxes that were expected to generate over Sh200 billion.
Most affected sectors during the current fiscal year have been roads, where Sh53 billion of the original budget had not been funded by the end of May, housing (Sh23 billion), energy (Sh17 billion), health (Sh25 billion and small businesses (Sh10 billion), of their respective original budgets.
A comparative analysis by the Nation on the spending habits of Kenya’s past presidents three months ago showed that while Uhuru Kenyatta and Mwai Kibaki committed 15.6 per cent of their respective national government budgets to development in their first year-and-a-half in office, President Ruto put just 11.7 per cent of the total spending of Sh4.7 trillion by end of February to development.
President Ruto did not provide a concise amount the State would slash from its recurrent spending- salaries, and luxuries such as travel and hospitality- the core issues the youth complained about during the protests.
