President William Ruto’s address this afternoon provided an update on Kenya’s public finance situation following the withdrawal of Finance Bill 2024.
President William Ruto has reversed the announcement he made five days ago that 2024/25 borrowing would reach KES 1.0 trillion.
He now says the government has resolved to slash 2024/25 spending by Kes 177.0 billion while borrowing an extra Kes 169.7 billion.
President William Ruto borrowing key areas
The President’s update on expenditure and borrowing signifies four key points:
1. The 2024/25 budget now stands at Kes 3,888,834,965,759 (net of debt redemptions). The budget, including redemptions, amounts to Kes 4,732,122,439,131.
2. The 2024/25 budget deficit now stands at Kes 829,534,965,759
3. GOK will now borrow KES 169.7 billion more than previously projected for 2024/25.
4. The fiscal deficit now stands at 4.58% of GDP, up from the earlier 3.3%.
Next Loan purposes
According to President William Ruto, the additional KES 169.7 billion in borrowing will safeguard the funding of essential services, such as
- The hiring of junior secondary school teachers and medical interns is ongoing.
- Funding the milk stabilisation programme for dairy farmers
- Retaining the fertiliser subsidy programme
- Settling the debts owed to farmers in the coffee sub-sector
- The new funding model for higher education necessitates additional funding.
President William Ruto Austerity Measures
The President has provided additional guidance regarding the austerity measures for 2024–25.
- The government will dissolve 47 state corporations with overlapping and duplicative functions.
- The state is suspending the decision to fill the positions of Chief Administrative Secretaries (CASs).
- The public service will immediately cut the number of government advisors by 50%.
- The government will remove the budget lines that support the operations of the First Lady’s offices (Kes 696,647,667), the spouses of the Deputy President (Kes 557,565,241), and the Prime Cabinet Secretary.
- The government will remove the budgetary provisions for confidential budgets in various executive offices and reduce the budget for renovations across the government by 50.0%.
- Public servants who reach the retirement age of 60 years will be required to retire immediately, with no extensions.
- The government, with the exception of security agencies, suspends the purchase of new motor vehicles for a period of 12 months.
- President Ruto suspends all non-essential travel by state and public officers.
Kenya has set up a taskforce to conduct a forensic audit of its Ksh 10.38 trillion public debt. The taskforce has three months to complete the audit exercise and submit its report.