MPs have increased the country’s budget by Sh200 billion on account of payment of interest rate and the depreciation of the shilling.
The Budget and Appropriations Committee (BAC) said it has allocated Sh145 billion in Supplementary Budget I to take care of interest payments on public debt.
The committee chaired by Kiharu MP Ndindi Nyoro said the overall budget for the current financial year will rise from Sh3.74 trillion to Sh3.95 trillion.
The Treasury had tabled a mini-budget that cut development expenditure but increased the budget by Sh187.3 billion to confront economic headwinds related to missed tax targets, debt repayment obligations, and spending pressures from critical sectors such as education and health.
The Treasury cut development spending by Sh41.96 billion with roads losing Sh20.7 billion.
Affordable housing, which is President William Ruto’s pet project, also suffered a Sh13.3 billion cut.
“The essence of this Supplementary Estimates I for 2023/24 is that we are revising the budget upwards by Sh200 billion to take care of interest and other pressing issues,” Mr Nyoro said during the scrutiny of the Supplementary Budget I.
“The primary reason of the Supplementary Budget I is to take care of interest payment occasioned by the hike in interest rate globally and the depreciation of the shilling,” he said.
He said the committee has moved the budget deficit from 4.4 percent of the gross domestic product (GDP) to 5.4 percent. “The budget deficit is within the range,” Mr Nyoro said at a press conference at Hilton Garden Inn, Mombasa Road.
Mr Nyoro said the additional Sh200 billion has been necessitated by the need to take care of debts, especially the interest component that stands at Sh145 billion.
Mr Nyoro said the Sh145 billion interest increase has been occasioned by the shilling depreciation against the dollar since June.
“The shilling was stronger in June but has depreciated; most debt is denominated in the dollar. We collect taxes in Kenya shilling and pay our debt in US dollars and other foreign currencies.”
He said the BAC has allocated an additional Sh8.2 billion towards the fertiliser subsidy and purchase of additional maize driers. “We are anticipating a bumper harvest and we expect to get 45 million bags of maize. We need to take care of the post-harvest losses. We need to buy more maize driers in addition to the ones already purchased,” Mr Nyoro said.
More money will also go to the National Cereals and Produce Board for buying maize across the country.
Mr Nyoro said Sh4 billion has been provided to the Coffee Cherry Fund while Sh1.2 billion has been set aside for payment of arrears to sugar farmers.
“We have also allocated Sh5 billion as capitation for Junior Secondary Schools and enhanced the allocation to Higher Education Loans Board and the new funding model for university education,” he said.
