Ruto budget cuts targeting Uhuru-Era Sh182 billion projects
Ruto budget cuts targeting Uhuru-Era Sh182 billion projects according to Treasury disclosure to the International Monetary Fund (IMF)
Ruto budget cuts targeting Uhuru-Era Sh182 billion projects according to Treasury disclosure to the International Monetary Fund (IMF).
To relieve the strain on the State’s resources and move the money to his priority projects, President William Ruto will freeze Sh182 billion in cash allotted to projects by the Uhuru Kenyatta administration.
The cut will be one of the fiscal readjustments that will be included in the supplementary budget for the financial year 2022–2023 that will be submitted to Parliament by the end of January next year, according to information provided by the National Treasury to the International Monetary Fund (IMF).
The action is a part of Dr. Ruto’s Sh290 billion budget cut this year, which targets non-priority recurring spending including domestic and international travel, training costs, hospitality costs, and development costs.
“On the spending side, we will contain expenditures at Sh3.386 trillion by partly offsetting existing pressures (Sh290 billion) through cuts on non-priority recurrent spending for Sh48.6 billion and an ambitious plan of rationalization of non-priority projects for Sh181.6 billion,” said the Treasury.
However, it is unclear the specific projects that have been earmarked for the chop, but Kenya has hundreds of stalled projects that have gone for decades without completion largely due to inadequate funds and misappropriation of allocated funds.
The government last year committed to cancel 437 stalled projects, which the IMF estimated that they need Sh1 trillion to be completed, a capital outlay that the government cannot currently afford.
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“The rationalization of projects mainly reflects the recognition of slow absorption of ongoing projects,” said the Treasury.
The additional spending of Sh279.26 billion, which includes arrears from the fiscal year 2021/22, that would have further bloated this year’s budget and put an additional burden on the exchequer, is being offset by President Ruto.
This comprises Sh61 billion granted under Article 223 of the Constitution as well as arrears totaling Sh89 billion from Mr. Kenyatta’s final fiscal year in power.
“Remaining pressures (Sh130 billion) are mainly related to the July and August pause in fuel price adjustments, July’s temporary introduction of a maize flour subsidy, unavoidable drought emergency interventions, and the launch of new initiatives from our administration, including plans to support agricultural production by subsidizing fertilizer,” said the Treasury.
Meanwhile, the Treasury is also swapping short-term with longer-term debt to reduce its immediate repayment obligations that have exerted huge pressure on government coffers.
Kenya’s debt servicing costs remain high, and the Treasury will spend Sh1.393 trillion to service both principal and debt interest in the current financial year.
This is an increase from the Sh1.151 trillion spent to service debt in the previous financial year.
Further, the government will this month drop funding for the fuel subsidy that has been key to stabilizing fuel prices in anticipation of reduced global crude oil prices for December and January that will organically lower pump prices.
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