How Finance Bill changes will affect state operations in next financial year

National Treasury Cabinet Secretary Prof Njuguna Ndung. [File, Standard]

The National Treasury might have to slash Sh178 billion from the initial 2024/2025 Financial Year’s budget proposal to accommodate changes made in the Bill, National Treasury Cabinet Secretary Prof Njuguna Ndungu discloses.

This comes a day after the government reversed several tax proposals in the Finance Bill 2024, following a Parliamentary Group meeting for the ruling coalition held at State House on Tuesday.

While announcing the reduction, National Assembly Finance Committee chair Kimani Kuria said the decision was made to lift the financial burden on Kenyans after considering feedback from public participation meetings.

Hours later, the Treasury CS Prof Njuguna Ndungu wrote to the Clerk of the National Assembly asking to cut the budget.

This, he attributed to an anticipation of the failure of parliament to pass the Finance Bill 2024.

In his communique, Prof Ndungu listed 43 offices within the Executive, Judiciary, and Legislature (Parliament) that will be hard hit by the budget cuts; in case the bill fails to pass.

For instance, those to be hard hit will be the Ministry of Education; specifically Junior Secondary School (JSS) education. The state had started the process of confirming intern teachers as permanent and pensionable for Sh18.9 billion.

If the CS’s budget slash proposal is approved, the process will have to remain on halt until further notice.

At least 20,000 intern teachers were set to secure permanent jobs beginning next month to enhance teaching in junior secondary schools as the pioneer class enters Grade 9 in January next year.

Other areas in the Ministry of Education to be affected by the proposed changes will include school infrastructure and the school feeding program going for Sh1.5 billion and Sh1.8 billion respectively.

Treasury had allocated Sh358.2 billion to the Teachers Service Commission, Sh142.3 billion for Basic Education; Sh128.0 billion for Higher Education & Research; and Sh30.7 billion for Technical Vocational Education and Training, Sh 9.1 billion Free Primary Education; Sh61.9 billion for Free Day Secondary Education; Sh30.7 billion for Junior Secondary School Capitation.

According to CS Ndung’u’s proposal to Parliament, Executive- President William Ruto’s office will have to get a Sh451 million reduction as the State House will face a budget cut of Sh500 million.

Security, another key area in the state operations and governance will get a budget slash of Sh2 billion from the initial Sh377 billion allocated as constituencies will also face a budget slash of Sh15 billion.

In the Ministry of Health, hiring and remuneration of medical interns might face another hurdle in the coming financial year after the CS proposed Sh3.7 billion reduction of money set aside for medical interns as well as money set aside for servicing of medical equipment.

Initially, Sh3.6 billion had been set aside by the Treausry for the Managed Equipment Services;

This comes months after medics downed their tools and took to the streets, demanding better payment and working for medical interns.

Through their respective unions, the medics argued that the medical interns handle the majority of patients in major public hospitals.

On Tuesday morning, the United Democratic Alliance (UDA) party held a Parliamentary Group meeting chaired by President William Ruto before they announced changes made after what they termed as ‘thorough deliberation and public outcry’.

Among the proposals dropped were taxes on bread, eco levy on locally manufactured diapers and sanitary pads, and motor vehicles. However, the tax on the transfer of mobile services remains at 15 percent.

"This move is also aimed at easing the burden of the rising cost of living and is in the best interest of Kenyans, following various meetings where public views were collected," Kuria Kimani said.

Despite scrapping the eco levy on locally manufactured products, the committee said the levy will still be imposed on imported goods raising the question of how manufacturers will source raw materials, which are majorly imported.

Eco levy is also known as environmental levy in some parts of the world and is mostly imposed to foster eco-friendly practices and promote the green agenda.

A week ago, CS Njuguna Ndungu presented to Parliament the Financial Year 2024/2025 budget, which projected a revenue collection Sh3.3trillion. This is equivalent to 18.5 percent of the country’s GDP.

The budget projected a total expenditure of Sh4 trillion or 22.1 percent of GDP.

Of this, recurrent expenditures will amount to Sh2.8 trillion or 15.7 percent of GDP.

Additional Reporting by Jacob Ng'etich.