The cost of running public offices under the national government rose by about Sh12 billion in the first quarter of the current financial year despite austerity measures announced following the collapse of a new, higher tax plan.
Latest data from the National Treasury showed that state ministries, departments and agencies spent Sh280.09 billion on salaries, wages and office management, operation and maintenance between July and September.
The release of funds to meet recurring needs – excluding debt repayment and pension disbursement – represents a growth of 4.47 per cent compared to Sh268.10 billion in a similar period last year.
The modest increase in expenditures came after President William Ruto’s administration was forced to cut expenditures following the fall of the 2024 Finance Bill which left a gap of Sh344.3 billion in the budget.
“To ensure the smooth implementation of the 2024/25 FY budget and protect the fiscal consolidation plan, National Treasury has embarked on rationalization of expenditure through Supplementary Estimates 1,” the Treasury wrote in its 2024 Budget Outlook and Review Paper in September.
In order to improve the efficiency of public spending, the government will implement austerity measures aimed at reducing recurrent spending.”
The Treasury Department struggled to find areas among repeated votes to cut expenses in the mini-budget that lawmakers approved in early August.
Budget documents show that the National Assembly reduced recurrent expenditure this financial year by Sh40.51 billion to Sh1.31 trillion – representing a reduction of Sh52.12 billion from Sh1.36 trillion the previous year.
Austerity measures largely targeted non-essential expenditures such as printing, advertising, travel, communications supplies and services, training, hospitality, furniture, renovation and vehicle purchases as well as research and feasibility studies for public offices.
However, the fiscal consolidation plan suffered a blow earlier in the year when teachers – who make up the bulk of public service workers – resisted a move to postpone the pay rise agreed earlier, and were joined by lecturers and non-teaching staff working in the public sector. . Universities.
Treasury data shows the National Police Service’s recurrent budget rose 12.15 per cent year-on-year to Sh27.17 billion in the review quarter, while the Teachers Service Commission increased by 8.36 per cent to Sh81.88 billion.
The State House expenditure, which last financial year exceeded the initial budget by Sh3.65 billion on extensive refurbishment and refurbishment works, recorded a 14.03 per cent decline in recurrent expenditure in the first quarter to Sh1.65 billion.
This came against the backdrop of canceling budgets for the renovation and division of government offices, purchasing new vehicles with the exception of security services, and reducing renovation expenses by half after withdrawing the tax bill.
However, the Executive Office of the President, based at Harambee House, spent Sh187.95 million, or 49.28 per cent more in the review period to Sh569.37 million.
The Ministry of Foreign Affairs’ recurrent budget for defense also rose by 28.92 percent to Sh36.27 billion in the three-month period.
The growth in the daily administration budget of national government bodies – against an average inflation of 4.1 per cent in the review period – contrasts with a decline of 2.9 per cent, or Sh8.01 billion, year-on-year to Sh268 billion. In a similar period last year.
It is a sign that Dr Ruto, who pledged to tame rising costs and recurring expenditures when he took office in September 2022, appears to be struggling to keep a tight lid on expenses even after a relatively good start during his first year. In the office.
“The Kenyan government (under Dr. Ruto) has initially made good progress in addressing weak public finances. There are signs of fiscal slide,” Jason Tuvey, deputy chief emerging markets economist at UK-based Capital Economics, wrote in a recent note on Kenya. Recently, with increased spending and declining revenue performance.
“This has prompted the government, in the 2024/25 Budget, to set out a range of tax increases in a bid to get fiscal consolidation plans back on track.”