After scrapping finance bill, Ruto slashes 2024 budget by $1.3 billion

President William Ruto has slashed Kenya’s 2024/2025 budget by KES 177 billion ($1.3 billion) weeks after protesters pushed back against a plan to raise taxes. Many Kenyans say that while the government has highlighted the importance of citizens making sacrifices, the cost of governance remains high.

Today’s decision to reduce the 2024/2025 budget to KES 3.67 billion ($28.7 billion) is part of a series of compromises by the government as calls for President Ruto’s resignation continued to grow this week.

“Over the last few days, our treasury team has been assessing the adverse impact of either reducing the budget by KES 346 billion in full or borrowing the KES 346 billion in full,” Ruto said in a televised address on Friday.

“Cutting the entire amount, in our assessment, would significantly and drastically affect the delivery of critical government services while borrowing the whole amount in full will occasion a fiscal deficit by a margin that will have significant repercussions on many sectors, including our exchange rate and interest rates.”

Ruto said the government will take loans to protect funding for several critical areas, including hiring junior secondary teachers and medical interns, funding the milk stabilisation program for farmers, and retaining the fertiliser subsidy programme.

It will also settle the debt owed to coffee farmers, provide more funding for higher education, and settle arrears owed to county governments and pensions.

Keen on austerity measures

According to Ruto, the government will introduce austerity measures, including dissolving 47 state corporations with overlapping functions and transferring their staff to relevant ministries and state corporations.

The position of chief administrative secretaries has also been suspended, and the number of government advisers will be reduced by 50%.

The budgets for the office of the First Lady, the spouse of the deputy president, and the prime cabinet secretary will be removed, along with confidential budgets for various executive offices, including that of the President.

Budgets for renovations will be reduced by 50%, and all public servants over 60 will retire without extension.

Kenya’s Deputy President Rigathi Gachagua requested KES 2.6 billion ($20 million) to renovate his office. The Office of the President had received KES 1 billion ($7.8 million) for renovations to the State House.

Over the last few years, powerful government employees have been blamed for wasting taxpayers’ money on luxury. Kenyans feel that the tax measures proposed in the 2024 Finance Bill would not have been necessary if the government and its employees had reduced corruption.