'We are broke!' Treasury CS Njuguna Ndung’u says Kenya in a financial hole

Simply put, the country is in a financial hole and Ndung’u, while equating the national budget to a household budget, says the available resources were less than the listed expenses, asking Kenyans to be patient. 

His concession on the State of the country’s economy dampens hopes of reduced cost of living for millions of Kenyans, currently in distress. 

"Ukiwa unaishi kwa hii nchi unajua ile matatizo ya hela iko hii nchi, it is something we have to resolve, we have a resource constraint…hatuna hela, lazima tujisaidie. Lakini tukipata hela, yote yatawezekana…tumetoka mbali, huo upungufu utakwisha, hatuwezi sema utaisha leo au kesho, lakini tutakuja kutatua hiyo shida…," said the Treasury CS on Wednesday.

He was speaking during an induction forum for the Senate Standing Committee on Finance and Budget. 

The CS's national economic status update is a bitter pill to swallow for millions of Kenyans burdened by the biting cost of living.

"Tuna upungufu, lazima tutulize, tungojee mpaka wakati utafika tuseme tumepata suluhu…bado tuko kwa shimo, lazima tujue hivyo. Kama unaishi hii nchi lazima ujue hivyo…," added Prof. Ndung'u

In his statement on the Financial Year 2022/2023 first supplementary estimates transmitted to the National Assembly, the cabinet secretary falls short in actualizing government austerity measures.

Only Ksh.106 billion is proposed for deduction from development spending and reallocation of Ksh.92.2 billion of the funds to recurrent expenditure. This leaves the government with savings of only Ksh.13.3 billion. 

In the first half of the financial year running from July to December last year, the taxman missed the revenue collection target by Ksh.51.8 billion. The under-expenditure of Ksh.108.6 billion is attributed to lower absorption recorded in recurrent and development expenditures of Ksh.52.1 billion and delayed disbursement to county governments worth ksh.56.6 billion.

"Hata wewe kwako nyumbani unaweza kuwa broke, lakini si uko na nyumba unakaa? Ni mahitaji yale uko nayo na zile pesa uko nazo unaona hazilingani…? Serikali ni kama kwako nyumbani, uko na mahitaji lakini pesa ya kutosheleza mahitaji yote hakuna. Lakini ukingoja kidogo, ufanye kazi kwa bidi, unapata hela za kutosheleza hayo mahitaji…," said the CS.

Governors are currently locked in a stalemate with the national government over the delayed disbursement even as they demand a bigger share of the pie in the 2023/2024 budget. The 47 devolved units are demanding a shareable allocation of Ksh.425 billion in the 2023/2024 budget, while the commission on revenue allocation proposes a Ksh.407 billion allocation to county governments. 

The Executive has however insisted that only Ksh.380 billion was available.

"Ksh.425 billion is good, but we don’t have it. Ksh.407 billion is not bad, but we don’t have it, what we have is Ksh.380 billion, that is the truth. If you want to hang us, we are helpless, if you want to remove our trousers and whip our buttocks, go ahead, we don’t have the money. What we don’t want is to cheat the governors that we will give them money that we don’t have...," DP Gachagua said recently.

Governors are scheduled to meet President Ruto this weekend in a retreat to deliberate on the financial standoff.

For now, the National Treasury says the focus was on managing the national debt that stood at Ksh.8.7 trillion as of September last year.

"If we borrow, we can only borrow to rescue the costly short-term debt, for example domestic debt, so we have to borrow concessionally to solve the expensive debt, we will solve that, it is solutions that can work, solutions that have been seen to work…," says Prof. Ndung'u.