Parliament cuts budget deficit by Sh183 billion

The National Assembly’s Budget and Appropriations Committee (BAC) says it has reduced the country’s budget deficit by Sh183 billion, a move it says will slightly increase development spending.

BAC chairman Ndindi Nyoro said the committee has rationalised expenditure as proposed in the 2024/25 Budget Policy Statement (BPS) that will now see the budget deficit stand at Sh703 billion down from Sh886 billion in the current financial year.

Bring down

“We have managed to bring down the budget deficit. The deficit will reduce from over Sh1 trillion in the 2022/23 budget to Sh886 billion in 2023/24 and to Sh703 billion in the financial year 2024/25,” said Mr Nyoro at a press conference held in  Machakos County.

“This is very commendable because we are lessening the appetite for debt budgeting. We have cut the deficit from the current 5.5 percent of the budget to 3.9 percent which is quite manageable.”

He said the committee is currently setting expenditure ceilings that will inform budget estimates of Sh4.143 trillion.

He said the BAC and the Treasury envisions to raise Sh2.94 trillion in taxes, Sh486 billion from appropriations-in-aid (AIA) and Sh49 billion from grants.

He explained this leaves a budget deficit of Sh703 billion which will be financed through borrowings from domestic and external sources.

Mr Nyoro said the reduction of the budget deficit has freed up resources that will lead to a slight expenditure in development spending of Sh853.9 billion.

On recurrent spending for the 2024/25 financial year, Mr Nyoro said BAC has allocated a total of Sh2.51 trillion for the Executive, Parliament and the Judiciary.

Sharable revenue 

He said the 47 county governments have been allocated a total of Sh391 billion as its sharable revenue from the national government.

The committee has allocated Sh1.2 trillion to the Consolidated Fund Services (CFS) which includes Sh1 trillion for payment of public debt, Sh183 billion for pensions and Sh17 billion for constitutional offices.

Mr Nyoro said out of the Sh1 trillion allocated to public debt servicing, Sh750 billion will be spent to repay domestic debt and a balance of Sh250 billion will go towards foreign debt service.

“We have allocated over Sh1.2 trillion to the CFS because we want to offset debt and reduce the deficit to guarantee stability in the economy,” Mr Nyoro said.

Free up resources 

“We intend to close the deficit even further so that we free up resources for development projects.”
Mr Nyoro said the committee had increased development spending in the health sector by an additional Sh9 billion.

The committee said it has increased the budget for the Immigration and Citizen Services by Sh3 billion for procurement of passports printing machines to alleviate the suffering of millions of youths who are seeking the vital travel document.

Kenyans have been queuing outside Nyayo House after machines that prints the 34, 50 and 66-page booklets broke down in March, inconveniencing applicants who had applied for the travel documents.

Mr Nyoro said the committee had made substantial increases in the budget of security, environment and several other critical areas around the Bottom-Up Economic Model.

“However, we have rationalised some areas because of the current economic situation and the budget absorptions rates by ministries, agencies and departments of government,” Mr Nyoro said.

Feel the growth

“This means that we will reallocate resources to areas that will make Kenyans feel the growth of the economy. We want small businesses to thrive.”

Mr Nyoro did not provide complete details of the budget increases or cuts saying the committee is still fine tuning its report on the BPS for tabling in the House next Wednesday.

Strengthened shilling

He said the committee is confident that the budget will be fully funded given the strengthened shilling against the US dollar, the expected foreign finance inflows, increased diaspora remittances and expected donor resources.

“As we scrutinise the BPS, we are interrogating individual items of expenditure to ensure that the budget is realistic,” Mary Emase, the BAC vice chairperson said.