Treasury warns of Ksh.200B budget cuts if Finance Bill 2024 is not approved, lists ministries to be affected

The National Treasury has told Parliament that amendments to the 2024 Finance Bill will cause a Ksh.200 billion gap in the revenue projected in the 2024/2025 budget.

In a letter dated June 19 addressed to the clerk of the National Assembly, Treasury Cabinet Secretary Njuguna Ndung’u laid out budget cuts that will be implemented across different departments in the three arms of government if the tax proposals in the Finance Bill 2024 are not approved.

“Should the Finance Bill 2024 be approved as proposed by the National Treasury, the National Assembly can proceed with the consideration of the Appropriations Bill as published; 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 KSh.200 billion,” Ndung’u said.

The Department of Energy will take the biggest cut with a Ksh.21.7 billion slash in its budget that will affect the last mile connectivity in constituencies.

According to CS Ndung’u, the other biggest loser will be the confirmation of Junior Secondary School (JSS) teachers with the Teachers Service Commission (TSC) set to lose Ksh.18.9 billion.

The State Department of Higher Education will be hit with a Ksh.8.3 billion cut that will among other things reduce allocations to the Higher Education Loans Board (HELB).

According to the Treasury, NG-CDF and the State Department for Roads will both suffer a Ksh.15 billion slash for ongoing road projects.

The fertiliser subsidy program and the county equitable share will suffer a Ksh.5 billion reduction each.

Others are the Executive Office of the President (Ksh.451 million), State House (Ksh.500 million), State Department for Internal Security (Ksh.2 billion), State Department for ASALS & Regional and Northern Corridor Development (Ksh.4.6 billion), Defence Ministry (Ksh.7.7 billion), State Department for Foreign Affairs (Ksh.1.8 billion).

Treasury said it will by Friday outline other measures towards a Ksh.21.6 billion reduction.

While presenting the 2024/25 budget on June 13, CS Ndung'u said Kenya plans to raise Ksh.3.992 trillion in the next financial year.

To foot this bill, he said the government seeks to borrow Ksh.333.8 billion from external sources and Ksh.263.2 billion from the domestic market.

With the 2024 Finance Bill which MPs are currently debating, the Treasury seeks to raise Ksh.346.7 billion in revenue through increased taxation.

But public outcry has made the Finance Committee slash some of the proposed levies, among them increased tax on bread, motor vehicle circulation tax and excise duty on vegetable cooking oil.

Meanwhile, the 2024 Appropriations Bill seeks to provide for appropriation of monies for the 2024/2025 financial year.

It was first read in Parliament on Tuesday and it provides for the issuance of the Consolidated Fund Ksh.1.8 trillion required to meet public expenditure during the fiscal year.

MPs are set to consider it in the House on Thursday afternoon.