Treasury mulls budget cuts if Finance Bill 2024 fails

A group of youth staged demonstrations against the Finance Bill 2024 tax proposals on July 18, 2024. [Kanyiri Wahito,Standard]

The National Treasury has written to the Clerk of the National Assembly with a proposal to cut Sh178 billion from the Financial Year 2024/2025 budget as rationalization in anticipation of the failure of parliament to pass the Finance Bill 2024.

Finance Cabinet Secretary Prof Njuguna Ndungu in the letter has listed 45 offices within the executive, Judiciary, and parliament that will be hit by the budget cuts in case parliament fails to pass the bill.

Those to be hard-hit will be the Junior Secondary Schools (JSS) whose confirmation and hiring of JSS teachers will be cut by Sh18.9 billion, cash transfers Sh5.5 billion, and the Constituency Development fund (NG-CDF) to lose Sh15 billion.

In the letter dated June 19, Prof Ndung'u noted that should the Finance Bill 2024 be approved as proposed by the National Treasury, the National Assembly can proceed with considering the Appropriations Bill.

"However, if the revenue-raising measures contained in the Finance Bill 2024 are not approved by the National Assembly, there will be a likely revenue shortfall of approximately Sh200 billion. To remain within the provision of Section 40 (5) (a) and Section 50 of PFMA, 2012 Cap. 412A, we propose the following measures; General expenditure cuts across the three arms of Government," said Ndung'u.

The Finance Bill 2024 has received opposition from a group of Kenyans who have complained that once passed, the bill would push the prices of essential commodities and some services up.

On Tuesday, youths staged a demonstration at Nairobi's Central Business District (CBD) dubbed 'Occupy Parliament' seeking to convince the MPs to reject the bill in total.

But CS Ndung'u observed that Section 40 (5) (a) and Section 50 of PFMA, 2012 Cap. 412A required that while approving the Finance Bill, the National Assembly should ensure that the total revenues raised are consistent with the approved fiscal framework and the Division of Revenue Act, and prescribes restrictions on the level of borrowing by the National Government, respectively.

The measures according to the CS included the general expenditure cuts across the three arms of Government, and the reversal of, the proposed additions in the Appropriations Bill for FY 2024/25 across all the MDAs, and all additional new budget lines.

In the list, the Presidency would lose Sh451 million, the State House another Sh500 million all for operations while the Interior ministry face a Sh2 billion cut on its security operations and the Defence counterpart to operate without Sh7.7 billion for security operations and modernisation.

The ongoing road projects would see a slashing of a whooping Sh15.1 billion, TVETS and TTIs would have to part with Sh800 million while Infrastructure for schools and School Feeding progamme Sh1.6 billion and Sh1.8 billion respectively.

In the list, Medical interns who recently negotiated for a package after a protracted two-month strike would lose part of their negotiated perks by Sh3.7 billion, Medical equipment service by Sh1 billion, and NGAAF by Sh1.5 billion.

Other key losers in Prof Ndung'u's list are the last mile connectivity (constituencies program) that would be forced to contend with Sh14.5 billion, fertilizer subsidy Sh5 billion, sugar reforms of Sh2.7 billion and street lighting Sh4.7 billion.