Education, roads and debt top President Ruto’s first full Sh3.6 trillion budget

National Treasury Cabinet Secretary Njuguna Ndung’u

National Treasury Cabinet Secretary Njuguna Ndung’u when he appeared before the Senate Standing Committee on Finance and Budget at County Hall in Nairobi on May 17, 2023. 

Photo credit: Dennis Onsongo | Nation Media Group

Education, infrastructure and public debt will gobble the lion’s share of President William Ruto’s first Sh3.6 trillion spending plan, the Budget and Appropriations Committee (BAC) has revealed.

The committee, in a rare disclosure, said it has allocated Sh600 billion to the Education sector, Sh400 billion to infrastructure, energy and information, and communications technology and Sh628.3 billion to domestic and foreign debt payments.

“The figures we are giving you are indicative but can change marginally. We have allocated a total of Sh3.599 trillion for the next budget of which ordinary revenue, which is basically taxes, is projected to be Sh2.57 trillion, appropriations-in-aid that ministries will spend at source is projected to be Sh322 billion and Sh42 billion in grants from donors,” BAC chairman Ndindi Nyoro said.

Mr Nyoro released the details during a media briefing on the scrutiny of the Sh3.599 trillion national government budget for the 2023/24 financial year. He said out of the total budget, Sh2.16 trillion has been allocated to the Executive, Sh40.4 billion to Parliament and Sh22.9 billion to Judiciary.

Consolidated Fund Services (CFS)—which pays interest rate on debt, pensions and constitutional commissions—has been allocated Sh986.2 billion while county governments will receive a total of Sh385.4 billion as their equitable share of revenue and Sh44.2 billion in conditional allocations. 

The committee, which will table its final report on Tuesday ahead of the reading of the budget in Parliament on June 15, said there is a budget deficit of Sh680 billion to be financed through domestic and foreign borrowing.

“We have allocated Sh1.5 trillion for recurrent expenditure by the national government, including the Executive, Parliament and Judiciary,” Mr Nyoro said. He added that Sh728 billion has been allocated for development projects in the financial year starting July 1.

National Treasury Cabinet Secretary Njuguna Ndung’u told BAC that the CFS allocation comprises Sh628.3 billion for domestic interest payments, Sh146.9 billion for foreign interest payments and Sh210 billion for pensions, salaries and allowances.

Prof Ndung’u said the total recurrent expenditure of Sh2.477 trillion is 15.5 per cent of the Gross Domestic Product (GDP) while development spending is Sh689.1 billion (4.2 per cent of GDP).

“Total allocation to county governments is projected at Sh429.7 billion (2.6 per cent of the GDP) while allocation to Contingency Fund is projected at Sh2.8 billion,” Prof Ndung’u said.

He said given the commitment to contain expenditure and revenue recovery measures put in place, the fiscal deficit, inclusive of grants, is projected at Sh663.5 billion or 4.1 per cent in 2023/24.

Net external borrowing

“The fiscal deficit for the financial year 2023/24 will be financed by net external borrowing of Sh131.5 billion (0.8 per cent of GDP) and net domestic borrowing of Sh532 billion (3.3 per cent of GDP),” Prof Njuguna said.

Mr Nyoro revealed that BAC has allocated Sh604 billion to the Education sector on account of the enhanced allocation to junior secondary schools.

“The highest ticket allocation has gone to the education sector, which is taking 27 per cent of the national budget. We have put money into technical vocational education training for hiring tutors and the universities have also received additional resources,” Mr Nyoro said.

He said infrastructure, roads, energy and ICT will receive the second-highest budgetary allocation of Sh400 billion.

“We have allocated more money to roads where contractors have signed contracts of more than Sh900 billion. We have rationalised these to Sh600 billion. We are pumping more money into roads and halted all new projects,” Mr Nyoro said. “We don’t want dead capital projects. We want to complete all pending roads.”

Mr Nyoro said BAC has allocated more money to 10 value chain projects including agriculture where Sh4.5 billion has been set aside for fertiliser subsidy and digitisation.

The committee said it is keeping an eye on public debt to ensure that the government does not borrow beyond its means.

“We are currently dealing with a numerical figure of Sh10 trillion, which is both inhibitive and limiting. There are proposals to shift to a debt anchor of 55 per cent to the Sh16 trillion GDP. This is a matter that will be handled by Parliament,” Mr Nyoro said.