President William Ruto has signed into law the Supplementary Appropriation Bill, 2024, which reduces government expenditure plans by billions for the 2024/25 financial year.
Effectively, this means that State expenditure has been reduced by Sh145.7 billion. The cuts are to the Executive (Sh139.8 billion), Parliament (Sh3.7 billion) and Judiciary (Sh2.1 billion).
The budget cuts were necessitated by Dr Ruto's rejection of Finance Bill, 2024, which had projected to raise an additional Sh346 billion to finance the Sh3.9 trillion budget for the current financial year 2024/25.
“While it could be prudent to reduce expenditures by the amount equivalent to the anticipated revenue shortfall of Sh344.3 billion, this was not tenable given the delicate balance between austerity measures and cushioning the livelihoods of the people and the economy,” a brief on the Bill reads in part.
“In this regard, the Bill seeks to create a balance by reducing recurrent expenditure while safeguarding critical essential expenditure in the Agriculture, Health and education sectors among others.”
Recurrent and development expenditure affected
The reduction affects recurrent and development expenditure for the three arms of government, constitutional commissions and independent offices.
The total reductions includes Sh145.7 billion from the nation government: consisting of Sh40 billion for recurrent expenditure and Sh105 billion for development expenditure.
The Executive budget has been reduced by Sh139.81 billion drawn from various Ministries, Department and Agencies (MDAs).
“The Bill contains a reduction of Sh3.7 Billion for Parliament and Sh2.1 Billion for the Judiciary,” a brief reads in part.
The major recurrent expenditure reductions include State House and Deputy President (Sh6 billion) and the National Treasury (Sh7 billion).
The reduction also affects various development projects under medical services (Sh6.9 billion) and Transport sector projects (Sh17.3 billion).
Despite the fiscal constraints, the Bill seeks to safeguard key critical expenditures with Sh20 billion allocated to directly support farmers to enhance production and productivity including Sh75 billion for the fertiliser subsidy, Sh3 billion for the Coffee Cherry Fund and Sh2 billion to waive coffee farmers' debts.
The others are Sh2 billion for the purchase of milk coolers, Sh1.5 billion for milk price stabilization, Sh700 million to support sugar farmers.
There’s also allocation towards financing Education. To support the reforms in the Education sector, Sh18.7 billion has been allocated for the confirmation of all Junior Secondary School interns into permanent and pensionable terms, Sh30.7 billion for capitation for JSS students including those transitioning to grade nine.
There is also Sh23 billion to universities for the Differentiated Unit Cost funding model, Sh31.3 billion to the Higher Education Loans Board for scholarships and loans and Sh17 billion to the University Funding Board for scholarships to university students.
“To support the reforms in the healthcare sector and promote universal health coverage, the Bill has appropriated Sh3.7 billion for the medical internship programme; Sh4 billion for the primary healthcare fund; Sh4 billion for contracted UHC healthcare workers; and Sh4.5 billion for Community Health Volunteers allowances and equipment.”
