By Antony Mutunga
Since President William Ruto took office last year, his administration has been on a mission to cut expenditure while finding ways to increase revenue. One of the government’s agenda was to reduce its spending by Sh300 billion. However, this has proved difficult, as according to its first Supplementary Budget for Financial Year 2022/23; the government has only managed to reduce its total spending for June 2023 by only Sh13.31 billion.
With a mission to achieve a recurrent budget surplus in the next three years, the National Treasury has moved to reduce its expenditure. According to the supplementary budget, the government’s total spending was reduced from Sh2.12 trillion to Sh2.11 trillion. The capital expenditure, which are funds the government uses to undertake new projects or investments, was reduced by Sh106.29 billion from Sh715.35 billion to Sh609.07 billion, affecting several projects that were part of the Uhuru administration.
Several sectors have seen their expenditure greatly affected, such as the state department of infrastructure, whose budget has been reduced by Sh47.29 billion from Sh221.29 billion to Sh174 billion. This saw the capital expenditure towards road infrastructure slashed by Sh47.11 billion from Sh151.82 billion to Sh104.71 billion. This is expected to affect some ongoing road projects the previous administration launched.
The ministry of energy has also lost a significant chunk of its budget, which was cut by Sh41.71 billion to Sh53.95 billion from Sh95.67 billion. This will affect key activities in the sector, from number of people that were to be connected to the grid to the number of institutions and enterprises, without power, especially in rural and remote areas, that were scheduled to be connected. Investments towards major projects in the sector are expected to feel the pinch as its capital expenditure was reduced by Sh38.71 billion.
As the country was also investing in a number of drainage and sewerage projects around the country, most will be left unfinished, for the moment, as the government cut the budget allocated towards the water, sanitation, and irrigation department by Sh24.24 billion from Sh83.94 billion to Sh59.70 billion. Other notable sectors that have faced reduced budgets include the state department for interior and citizen services, whose funding was cut by Sh31.44 billion, the National Intelligence Service (NIS) (10 billion), the Health Ministry (Sh9.04 billion), and that of Housing and urban development (Sh7.93 billion).
Despite the government managing to cut its overall expenditure in the supplementary budget, its recurrent expenditure was on the rise. Referring to day-to-day expenditures such as wages and salaries, employer contributions, transfers, and travelling, the recurrent expenditure estimate was increased by Sh93 billion to Sh1.5 trillion. This is the case even though the new government had promised to reduce its expenditure.
However, this is mainly due to the hustler fund budget that went towards the fund, launched to help those struggling with access to capital and the additional workforce in different sectors. A number of sectors also saw their budgets increase as other offices received their initial allocations. For instance, the office of the deputy president and the office of the prime cabinet secretary were allocated a recurrent expenditure estimate of Sh450.85 million and Sh751.91 million, respectively. Additionally, the president’s office saw its total expenditure estimate increase from Sh23.07 billion to Sh31.42 billion.
The sector that has emerged as the biggest gainer in the budget is the Ministry of Petroleum and Mining which has seen its expenditure estimate being increased from Sh24.65 billion to Sh69.39 billion. The increase is because of additional funding of Sh42.54 billion for oil market price stabilization in the current expenditure. However, its capital expenditure was reduced by Sh801.42 million from Sh3.30 billion to Sh2.50 billion.
The department for Crop Development and Agricultural Research was also one of the top earners as its budget estimate was increased from Sh41.51 billion, comprising Sh14.46 billion for the recurrent expenditure and Sh27.04 billion for the capital expenditure, to Sh66.6 billion, whereby the recurrent expenditure is Sh18 billion while the capital expenditure is Sh48.6 billion.
According to data from the national treasury, the overall change reflects a change in the recurrent expenditure caused by additional funds to cater for maize flour subsidy; reduction of excess
provision for salaries; transfer of Kenya Animal Genetic Resource Centre, Kenya Tsetse and Trypanosomiasis Eradication Council, Warehouse Receipt System Council from the state department; and transfer of the National Biosafety Authority from the State Department for University Education while the increase in capital expenditure is on account of additional funds to cater for fertilizer subsidy for short and long rains, payment of sugarcane farmers arrears and maintenance of Nzoia Sugar Factory; transfer of functions; and reduction of funds.
The state department of cooperatives (Sh19.10 billion), the Teacher Service Commission (Sh6.04 billion), on account of hiring additional teachers, state department for public health and professional standards (Sh5.58 billion), and the department for transport (Sh2.44 billion) being the other gainers who saw their estimates increased.
President Ruto and his administration will be handling their budget come the next financial year. However, so far, they are far off their target. With a high public debt that hit Sh9.15 trillion in December 2022, the new government will have a difficult period. With borrowing already greatly limited and the country currently paying off its debt, the promise by the administration to change the deficit to a surplus may take more time to be attained. (
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