In his latest report, Treasury Cabinet Secretary John Mbadi on Tuesday disclosed how President William Ruto’s administration spent Ksh415 billion against the law.
The report, signed by the Treasury CS, showed that out of the Ksh766 billion borrowed by the government in the 2023/2024 fiscal year, it spent Ksh415 billion on recurrent expenditure while allocating only Ksh350 billion on development.
The move by the government to spend more on recurrent expenditure rather than development breached section 2C of the Finance Management Act of 2012.
The Act sets the minimum threshold for recurrent expenditure to avoid spending all revenue and debt on financing cyclic activities.
The National Treasury building in Nairobi County.
Photo
National Treasury
According to the 2024 Budget Review and Outlook draft paper released by the CS, the Ksh415 billion was an 82 per cent rise compared to the previous period when the government spent 227 billion on recurrent expenditure as per the law.
The latest report by the National Treasury highlighted the main reasons behind the government’s missed tax collections amidst spending pressure.
Meanwhile, the government is currently in a predicament of raising adequate revenue to fund the development projects and recurrent activities in the 2023/2024 Financial Year.
This follows the recent decision by President William Ruto to withdraw the Finance Bill 2024 that aimed at raising Ksh302 billion. Ruto’s move saw the government resorting to implementing austerity measures.
The National Treasury in a recent announcement revealed the government’s intention to borrow more funds in the current fiscal year in a bid to bridge the budget deficit that currently stands at Ksh510 billion
Sources privy to the information disclosed that the government had initiated talks to borrow Ksh193 billion from the United Arab Emirates to fund the budget in the 2024/2025 fiscal year.
According to Bloomberg, the loan would carry an interest rate of about 8.2 per cent. However, the terms and conditions of the credit may change as discussions continue.
While the financing comes with a rather high interest rate, Kenya joins the list of African nations that have benefitted from Abu Dhabi’s bailouts. The move comes hardly a year after Egypt received Ksh4.5 trillion ($35 billion) from the Asian lender.
United Arab Emirates Minister for Investment Mohamed Alsuwaidi speaking at State House Nairobi on April 24, 2024.
PCS
