President Ruto budget cuts uncertain on deferred spending

The new administration plans to cut the 2022/23 budget by at least Ksh.300 billion lies in limbo from carry-over expenditures from the previous administration.

The deferred spending from the 2021/22 financial year which was pushed to the current fiscal year is likely to be a spillage to planned fiscal consolidation according to the International Monetary Fund (IMF).

Spending for the concluded 2021/22 financial year fell from original targets on shortfalls in external commercial financing in the period.

“Obligations carried over from last fiscal year and an increase in unbudgeted spending in early FY2022/23 increased pressures on the budget,” noted the IMF in a statement on Tuesday.

Expenditure and net lending for the year ended June 2022 was shy of the Ksh.3.286 trillion target by Ksh.262.9 billion.

Recurrent spending was off-target in the period by Ksh.92.3 billion at Ksh.2.227 trillion while development spending was shy by Ksh.121.7 billion at Ksh.657.5 billion.

During the same period, net foreign financing was Ksh.200.6 billion shy of the mark as Kenya failed to raise both a sovereign bond/Eurobond and a syndicated loan after an unprecedented spike to global interest rate which made borrowing for the country untenable through international capital markets.’

In the opening quarter of the 2022/23 fiscal year, the deferred spending alluded to by IMF has been manifested by overspending in the three months from July to September.

Data from the National Treasury places total expenditure and net lending for the three months at Ksh.759.5 billion from a target of Ksh.694 billion to reveal a Ksh.65.5 billion spending surplus.

Both recurrent and development spending in the period was above board by Ksh.64.1 billion and Ksh.36.8 billion respectively.

To achieve the targeted Ksh.300 billion budget cuts, the National Treasury plans to rein in on non-essential spending such as foreign travel and trainings.

The success, or lack of it in achieving the planned budget cuts is expected to be revealed in the upcoming 1st 2022/23 supplementary budget which is expected to be ready in January 2023.