The cost of running the national government has risen faster than tax receipts in the current financial year, going against President William Ruto’s pledge to lessen the burden on taxpayers by presiding over a cost-efficient administration.
The Ruto government spent Sh905.78 billion on administration, operation, and maintenance of offices, as well as salaries and wages, in nine months through March 2024, the latest Treasury data shows.
The recurrent expenditure, excluding debt repayment costs, represents a growth of 11.18 percent over Sh814.71 billion in a similar period a year earlier, which partly included funding for the 2022 General Election.
The growth outpaced that of tax receipts, which rose 10.17 percent in the same period to Sh1.54 trillion, according to the data that discloses inflows and outflows from the government’s main account.
Analysts say the rate at which the cost of running government is increasing points to growing wastage in the use of taxpayers’ money amid stagnant or falling productivity levels in the public sector.
“Governments are meant to exist and deliver services in perpetuity, which means that as the size of government grows, recurrent expenditures are likely to increase indefinitely. However, this does not mean that there are not wastages or inefficiencies in the public sector that drive a wedge between productivity and compensation (wages),” says Dr Abraham Rugo, the International Budget Partnership’s country manager for Kenya.
The double-digit growth in the cost of running national government has come despite Dr Ruto’s pledge to keep a tight lid on administrative and maintenance costs and raise tax collections by raising the historically low compliance levels among companies and individuals.
The President had, upon taking power in September 2022, pledged to institute a raft of expenditure savings to ease the burden of funding government operations and administration.
The cost-cutting measures were expected to save as much as Sh300 billion during the financial year 2022–23, his first in office.
The expenditure, however, continued to rise, with the Treasury blaming the climbing costs on the Sh279.26 billion in non-debt payments it inherited from the Uhuru Kenyatta administration, which was either carried over from the financial year ended June 2022 or unbudgeted like the Sh20 billion Hustler Fund. The recurrent expenditures, excluding debt servicing costs, for the first nine months of the current fiscal year grew at a pace nearly double the inflation rate, which averaged 6.7 percent.
Central Bank of Kenya governor Kamau Thugge said earlier this year that the government had run out of room for spending cuts. This means the Ruto administration’s plan to ensure Kenya ‘lives within her means’, or what is technically known as fiscal consolidation, largely hinges on increased taxation.
“I know, sometimes, we think that there is a lot to cut on expenditure, but you will be surprised to know… there is very little room for sharp expenditure cuts, and we don’t want to cut development expenditure,” said Dr Thugge last July, the first month of the current fiscal year. “So it’s really very important that we mobilise revenue so that we reduce borrowing so as to stabilise our debt going forward.”
Dr Rugo, however, says successful restructuring of parastatals could be “a place to start” in reducing the climbing non-debt recurrent expenditures. “A big concern that also emerged in the wage conference (a fortnight ago) is that we are not getting value for money invested in wages. Productivity is thus a key area to focus on,” he said.
The growing trend of non-debt recurrent costs has persisted despite a directive by Head of the Public Service Felix Koskei to accounting officers to stop reimbursing expenses incurred on trips taken for benchmarking and study visits, training, and related capacity-building initiatives, research, academic meetings, and symposia undertaken by government officials.
Other expenses targeted in the fresh austerity attempt include conferences and meetings of general participation, side events and exhibitions, and meetings and events of committees and associations.
“Public institutions wishing to travel and participate in any of the pipeline events in the above categories are required to request virtual participation where available and, alternatively, engage the Ministry of Foreign and Diaspora Affairs to ensure on-the-spot participation of diplomatic officials in the country of reference,” said Mr Koskei in the memo.