Kenya has restructured its upcoming budget for the fiscal year 2024-25, reducing it to Sh3.7 trillion from the initially proposed Sh4.2 trillion set to commence on July 1.
During a three-day state visit to Accra, Ghana, President William Ruto addressed the Kenyan diaspora, stressing the importance of fiscal prudence: “I had a meeting with parastatals and ministries, and we agreed that we are reducing our budget from Sh4.2 trillion to Sh3.7 trillion.
”We need to live within our means, you cannot spend what you do not have. Cut the clothes to the right size,” Ruto emphasized.
While specifics on the implementation of these budget cuts were not provided, the President hinted at forthcoming changes, particularly in parastatals’ recurrent spending and other line items.
Ruto’s announcement follows the recent Budget Policy Statement (BPS) by the National Treasury, which outlined a projected expenditure of Sh4.23 trillion against a total revenue of Sh3.39 trillion for the upcoming fiscal year. The Treasury predicts a deficit of Sh832.3 billion or 5.2 percent of GDP by the end of the current financial year, aiming to lower it to Sh800 billion or 4.4 percent of GDP in 2024/25 and further to Sh719.9 billion or 3.6 percent of GDP the subsequent year
The revenue collection target for the current fiscal year ending in June stands at Sh2.62 trillion, with the Kenya Revenue Authority (KRA) grappling to meet expectations. Shortfalls, amounting to Sh186.2 billion in the first six months, primarily stem from underperformance in corporate and income tax collections, exacerbated by revenue-raising measures such as the increased value-added tax (VAT) on fuel introduced in the Finance Act 2023.
