State firms get back Sh6.73bn in blow to Ruto’s budget cuts

William Ruto

President William Ruto addresses parastatal chairpersons and Chief Executive Officers at State House, Nairobi.

Photo credit: PCS

What you need to know:

  • President Ruto in March directed parastatal heads to slash their recurrent budgets.
  • Parliamentary committee approves requests from at least 16 State departments.

State Departments have successfully lobbied lawmakers to reinstate at least Sh6.73 billion earlier chopped from the budgets of parastatals, dealing a blow to President William Ruto's plan to cut funding to State agencies by a minimum of 30 per cent.

The Select Committee on Budget and Appropriations (BAC) of the National Assembly has approved requests from at least 16 State departments to exempt parastatals under their watch from State House-led rationalisation plan.

This signals a pushback of restructuring programme for State-owned entities, led by State House’s Chief of Staff and Head of the Public Service Felix Koskei.

Dr Ruto at a meeting at State House on March 26 directed parastatal chairpersons and chief executives to slash their recurrent budgets by nearly a third from the year starting July.

This is part of far-reaching austerity measures for State corporations in a rationalisation plan, backed by the International Monetary Fund.

The restructuring plan targets to end budgets for commercial corporations and maintain a minimum allocation to entities from July.

The proposed austerities for parastatals will largely hit non-essential expenditures such as memberships to clubs for top management, repairs, and hiring of new staff hardest.

“Since the submission for the financial year 2024/25 Budget to the National Assembly, the National Treasury has received numerous requests from MDAs [ministries, departments, and agencies],” Treasury Principal Secretary Chris Kiptoo had told BAC late May. “We will be submitting to the National Assembly proposals for exemption from the rationalization of State Corporations.”

The BAC’s report on the Estimates of Revenue and Expenditure for the financial year 2024-25, which has been adopted by the House, shows that the Treasury accounts for more than a third of reinstated budgets for semi-autonomous government agencies.

The Ndindi Nyoro-led committee has recommended that the House reinstates nearly Sh2.61 billion of budgets, which had been slashed from SAGAs under the Treasury, the custodian of public investments.