Due to a drop in tax collection due to the closure of companies and investors fleeing due to unfavourable business conditions, the National Treasury has cut the 2024–2025 Financial Year (FY) budget by Kes 273 billion after failing to hit the target.
This implies that starting on July 1, 2024, the Ministry will reduce spending from Kes 4.188 trillion to Kes 3.92 million. As President William Ruto urges more taxes from every ministry, cash flow has been less and less, making the government cut down on expenditures.
This financial year, the government has failed to reach even half of the estimated revenue collections.
"Tax collection during the last eight months was Kes 1.37 trillion, less than half of the initial revenue projection of Kes 2.49 trillion," according to KRA official figures.
In a communication to Parliament, the National Treasury stated that the action would reduce spending to a manageable amount and limit borrowing.
"We have decreased the FY 2024–2025 projections for the budget by 273.3 billion from the proposed 2024 BPS owing to a recalculation of the anticipated revenues."
"We predict that gross expenditures in FY 2024–2025 will total KSH 3,914.9 billion."
The proposed budget calls for spending Kes 2.24 trillion on the executive branch, Kes 1.52 trillion on recurring expenses, and Kes 724.4 billion on development.
The consolidated fund services (CFS) will receive a total allocation of KES 1.21 trillion. This includes Kes 749.9 billion for domestic debt repayment, Kes 259.9 billion for foreign debt repayment, and Kes 203.6 billion for pensions, wages, and allowances.
The county governments would receive Kes 391.1 billion, a reduction from an additional 54.9 billion in grants and loans.
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