Treasury reveals 24 areas that will suffer budget cuts

The National Treasury has directed ministries and government departments to cancel all new projects for this financial year as the government re-organises its budget following the rejection of the Finance Bill, 2024.

Treasury Cabinet Secretary Njuguna Ndung’u in a circular to all accounting officers also said that only pending bills carried from the previous Financial Year 2023/2024 will be prioritised and that no new tenders should be awarded.

Reeling from the new austerity measures announced by President William Ruto, Prof Ndung’u also instructed the accounting officers from all the ministries to revise their budget estimates and submit them by the close of business on Monday, July 8.

“These measures will be undertaken in all Ministries, Departments and Agencies (MDAs) including Semi-Autonomous Government Agencies in the expenditure areas provided,” Mr Ndung’u says in the circular.

According to the circular, 24 areas are targeted for massive budget cuts as the government seeks to plug in the hole left by Sh344.3 billion after President Ruto declined to assent to the Finance Bill, 2024

According to the circular, monitoring and evaluation expenses, operating expenses, refurbishment of buildings, [purchase of vehicles and other transport equipment, purchase of office furniture and general equipment, and purchase of generators have all been reduced by 100 percent.

Rehabilitation and renovation

Other expenses that have been reduced in full include rehabilitation and renovation, research, feasibility studies, project preparation and design, housing loans to public servants, car loans to public servants, confidential expenditures, examination and invigilation fees, membership fees dues and subscription to professional and trade bodies.

Areas that will see 50 per cent budget cuts include domestic travel and subsistence and other transport costs, hospitality supplies and services, and maintenance of buildings and stations 

Communication, supplies and services, foreign travel and subsistence, and other transportation costs, training expenses, contracted professional services, and temporary committee expenses have all suffered 20 percent budget cuts.

“Accounting officers are required to strictly adhere to the contents of these guidelines and draw the attention of all; officers working under them including Chief executive officers of Semi-Autonomous Government Agencies and Autonomous Agencies (SAGAs),” Mr Ndung’u says.

Addressing the Nation at State House, Nairobi on Friday, President Ruto said the government would present a proposal to the National Assembly to approve the expenditure cuts

President Ruto said Sh166 billion to finance this Financial Year budget would be raised through borrowing.

The 2024/24 Financial Year budget was to be funded through additional revenue measures amounting to Sh344.4 billion as contained in the Finance Bill, 2024

However, following sustained protests over the Bill and rejection by various stakeholders, President Ruto declined to assent to it creating a gap of a similar amount.

Far-reaching measures

President Ruto has since announced far-reaching measures to raise the money including the scrapping of 47 State Corporations and the reduction of advisors that have been gobbling billions of taxpayers' money by half.

“Forty-seven state Corporations with overlapping and duplicative functions will be dissolved, resulting in the elimination of their operational and maintenance costs. Their functions will be integrated into the respective ministries,” President Ruto said.

Other measures announced by the President on Friday include the formation of a task force on forensic audit of public debt, suspension of appointment of Chief Administrative Secretaries (CASs), barring of state officers from participating in harambees, no extension of term of service for civil servants that have attained 60 years, removal of confidential budget in offices including State House and

Despite the budget cuts, President Ruto said he will ensure the continuation and funding of key areas which include the hiring of 46,000 Junior Secondary School teachers on a permanent and pensionable basis, recruitment of medical interns, money to buy milk from farmers at Sh50 per litre and the retention of fertilizer subsidy.

Other areas he said will not be affected by the budget cuts include funding of stalled road projects, paying coffee farmers’ debts, money for the proposed Coffee Cherry Fund, and cash to public-owned sugar firms to pay farmers, new university funding, arrears to counties and the National Constituency Development Fund.

 [email protected]