Ruto fails to cut spending in first supplementary budget
Friday February 03 2023
President William Ruto’s administration has failed to cut the annual government spending in its first mini-budget due to multi-billion shilling expenditure in his predecessor’s last days, continued expenses on subsidies and the launch of the hustler Fund.
The Treasury has informed the International Monetary Fund (IMF) it was left with little room to cut State spending after it inherited undisbursed expenditures of Sh89 billion from the last financial year and Sh61 billion spending that occurred outside the budget during the last days of former President Uhuru Kenya.
The new administration reckons that it also incurred extra spending on the launch of the Hustler Fund and support for fuel and fertiliser subsidies.
The commitments inherited from the Uhuru administration and extra spending on implementing President Ruto’s campaign promises have left the Treasury with an additional expenditure of Sh290 billion.
This has made it difficult for the Treasury to implement the President’s instructions to cut Sh300 billion from annual government spending in the supplementary budget, which was set to be tabled in Parliament last month.
Dr Ruto, who was sworn in on September 13, said the budget cuts were aimed at bringing the country “back to sanity” and the recurrent expenditure down further next year by an undisclosed amount, in a bid to achieve a recurrent budget surplus by the third year.
Read: Ruto expands budget by 7pc to Sh3.64trn
Instead, total government spending is projected to increase by Sh33.4 billion in the current financial year ending June to Sh3.39 trillion, the 2023 Draft Budget Policy Statement (BPS) shows.
This came despite cutting Sh48.6 billion from the recurrent spending and lowering development expenditure by Sh181.6 billion.
Recurrent expenditure usually includes civil servants’ salaries, domestic and foreign interest payments, pensions and fuel costs for the government’s fleet of vehicles.
Treasury Cabinet Secretary Njuguna Ndungu and the Central Bank of Kenya (CBK) governor, Patrick Njoroge, told the IMF that a lot of the spending pressures came from the previous administration.
“Besides the carryover from FY2021/22, we found ourselves confronted with additional spending pressures for Sh190 billion stemming from expenditures that emerged between July and mid-September 2022, including Sh26 billion approved under Article 223 of the constitution,” said the two officials in a note to the IMF.
Article 223 of the Constitution allows the State agencies to spend beyond amounts that had not been approved by the National Assembly on condition that lawmakers’ nod will be sought within two months after the spending.
Dr Ruto became President after winning a closely contested election last month, with campaign pledges to create economic opportunities for the poor.
He faces a very narrow fiscal space to roll out his policies after his predecessor increased public borrowing to fund infrastructure projects.
The draft BPS projects expenditure for the day-to-day running of the government, or recurrent expenditure, will be Sh81.7 billion more than what the previous administration budgeted, with much of the spending pressure coming under expenses labelled as “others” and salaries.
Read: Hustler funding gobbles up lion’s share of Ruto budget
Recurrent expenses under “others” are expected to increase by Sh69.8 billion to Sh364.5 billion, while the public wage bill for the Executive is seen rising by Sh23.5 billion to Sh560.7 billion.