At least 18 public entities, including the State Department for Arid and Semi-Arid Lands (Asals) and Regional Development, Immigration, Interior and National Administration, National Intelligence Service, and State House, blew their budgets by a combined Sh52.13 billion in the first half of the current financial year, raising questions about the state's austerity plans.
New data by the National Treasury shows that though the government’s overall recurrent spending for the half year dropped by 7.60 percent to Sh746 billion compared to the previous year, some public agencies still burst their budgets.
The cumulative Sh61.35 billion drop in recurrent expenditure in the six months to December 2024 was the first such fall in four years. It came in a period when President William Ruto’s administration took a tough stance in enforcing expenditure cuts in the wake of the failure to enforce new and higher taxation measures because of deadly youth-led protests.
The drop was the first since the half-year period ended in December 2020, when most public offices were shut and staff worked from home as part of the measures to contain the spread of Covid-19 infections.
“In order to improve efficiency in public spending, the government will implement austerity measures aimed at reducing recurrent expenditure,” the Treasury wrote in the Budget Outlook and Review Paper for the current financial year ending June.
The austerities largely targeted non-essential expenditures such as printing, advertising, travel, communication supplies and services, training, hospitality, furniture, refurbishment and vehicle purchase as well as research and feasibility studies for public offices.
Despite the dip in overall recurrent expenditure, analysis showed that about 18 public entities bucked the trend. For example, the State Department for Asals and Regional Development overshot its targeted budget by 167.62 percent.
This is after the department, tasked with coordinating and accelerating integrated development in the Asals and the basin regions, withdrew Sh6.43 billion against a target of Sh2.40 billion — a variance of Sh4.41 billion.
It was followed by Basic Education whose recurrent expenditure amounted for the six months amounted to Sh83.44 billion, which was 42.82 percent more than the Sh58.42 billion estimated cash requirements for the period.
The Interior and National Administration department burst its half-year recurrent budget by 31.69 percent to Sh18.32 billion, while the National Intelligence Service exceeded by 30.34 percent to Sh30.21 billion.
The Immigration and Citizen Services department spent 24 percent more to Sh6.12 billion, while the State House, which has struggled to keep expenditures within the budget since Dr Ruto took office, withdrew Sh414 million, or 17.26 percent, to Sh2.81 billion.
Article 223 of the Constitution, operationalised through Section 36(9) of the Public Finance Management (National Government) Regulations, enables State offices to spend as much as 10 percent more than the cash approved by the National Assembly.
The Constitution requires the Treasury to table in the House a mini-budget two months after the withdrawal of unbudgeted money from the Consolidated Fund without the approval of the members of parliament. This was done last month, and the document is awaiting debate and approval.
The PFM regulations, however, bar legislators from approving a supplementary budget that exceeds 10 percent of “the approved budget estimates of a programme or sub-vote unless it is for unforeseen and unavoidable need”.
Other departments with above-target recurrent include Vocational and Technical Training by 11.99 percent to 12.93 billion, Higher Education and Research by 8.47 percent to Sh64.67 billion, and National Police Service (4.52 percent to Sh55.16 billion).
The expenditure bursts came at a time when ordinary revenue —taxes, levies, fines, forfeitures, and rent on buildings — fell short of nearly the Sh1.25 trillion target by Sh93.25 billion.
This is after the Kenya Revenue Authority collected Sh1.16 trillion in the half year to December 2024 — which was, however, a 6.3 percent rise over Sh1.09 trillion in the previous year.
The revenue numbers showed that value added tax (VAT) underperformed the target by Sh36.5 billion, income tax by 28.6 billion, excise duty (Sh13.7 billion), and import duty (Sh6.1 billion).
The Treasury blamed shortfalls in revenue collections on the withdrawal of the Finance Bill, 2024, which initially left Sh344.3 billion budget hole, and deadly anti-government protests, which slowed down economic activities.
The Parliamentary Budget Office (PBO), a think-tank that advises lawmakers on fiscal and budgetary matters, reckons that rejection of the Finance Bill 2024 offers the Treasury a chance to expand the tax base rather than burdening individuals and firms already in the tax net.
"Rather than relying on the introduction of new tax policies that are likely to create new tax burdens on Kenyans, the government may focus on improving tax administration through better enforcement of current tax policies, enhanced data analytics, and increased use of technology to simplify tax processes and improve tax compliance," PBO says in its latest review of the country's taxation plan.
→ cmunda@ke.nationmedia.com
Unlock a world of exclusive content today!Unlock a world of exclusive content today!
