President William Ruto has announced a significant reduction in Kenya’s 2024/2025 budget, slashing it by KES 177 billion ($1.3 billion) following public protests against proposed tax increases. The decision to reduce the budget to KES 3.67 trillion ($28.7 billion) comes amid growing calls for Ruto’s resignation due to high governance costs despite citizens being asked to make sacrifices.
Balancing Act: Budget Cuts and Borrowing
In a televised address, President Ruto explained the challenges faced by the treasury in deciding between fully reducing the budget by KES 346 billion or borrowing the entire amount. “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 stated.
To mitigate these impacts, the government opted for a balanced approach. Loans will be taken to ensure funding for critical areas such as hiring junior secondary teachers, medical interns, supporting the milk stabilization program for farmers, and maintaining the fertilizer subsidy program. Additionally, the government will settle debts owed to coffee farmers, provide more funding for higher education, and clear arrears owed to county governments and pensions.
Implementing Austerity Measures
President Ruto outlined several austerity measures aimed at reducing government expenditure:
- Dissolving State Corporations: 47 state corporations with overlapping functions will be dissolved, and their staff will be transferred to relevant ministries and state corporations.
- Suspending Positions: The position of chief administrative secretaries will be suspended, and the number of government advisers will be reduced by 50%.
- Budget Cuts for Executive Offices: Budgets for the offices 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.
- Reducing Renovation Budgets: Budgets for renovations will be reduced by 50%, and all public servants over 60 will retire without extension.
Deputy President Rigathi Gachagua had requested KES 2.6 billion ($20 million) to renovate his office, while the Office of the President received KES 1 billion ($7.8 million) for State House renovations. These requests highlight the ongoing concerns about government spending on luxury items, which many Kenyans believe could be curbed to avoid the need for the controversial tax measures proposed in the 2024 Finance Bill.
Public Sentiment and Government Accountability
Over the past few years, the government has faced criticism for wasteful spending and corruption. Many Kenyans feel that the proposed tax measures would not have been necessary if the government and its employees had taken steps to reduce corruption and unnecessary expenditure.
