Kenyas projected expenditure plans for the 2024/25 financial year are expected to reduce by Sh350 billion owing to the contracting tax net flows as the Treasury prepares to present to the National Assembly the governments printed budget estimates for tabling in the House by tomorrow.
The 2024 Budget Policy Statement (BPS) approved by the National Assembly in March this year, had projected Sh4.2 trillion as the expenditure plan of President William Rutos Kenya Kwanza administration for the 2024/25 financial year.
To finance the budget, the 2024 BPS had projected revenue collection for the 2024/25 financial year at Sh2.95 trillion up from the current Sh2.62, representing a 14 per cent growth.
The projected budget leaves a fiscal deficit of Sh703.9 billion, about 3.9 per cent of the countrys Gross Domestic Product (GDP), to be financed through domestic borrowing of Sh377.7 billion and foreign market borrowing of Sh326 billion.
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However, the Budget and Appropriations Committee (BAC) of the National Assembly and the Parliamentary Budget Office (PBO) have warned that the failure to hit the right revenue targets presents the government with no other alternative but to reduce its projected expenditure plans for the next financial year.
This is unless the government goes big on taxation in the Finance Bill 2024, for instance, the planned introduction of motor vehicle circulation tax and withholding tax on farm produce, among others,.
The 2024/25 financial year starts on July 1, this year.
The BAC report on the consideration of the 2024 BPS as adopted by the House in March this year, shows that by December 2023, six months into the current financial year, the government had a revenue shortfall of Sh178 billion.
This even as the PBO projects Sh300 billion in missed revenues for the current financial year.
The committee noted with concern that the revenue raising measures contained in the 2023 BPS and Finance Act 2023, have not achieved the revenue growth targets, the BAC report on the 2024 BPS reads.
If the revenue target for the 2023/24 is missed by a big margin that would indicate similarly, the 2024/25 financial year target is way too high, the committee warns.
The Parliamentary Budget Office (PBO) in its quarterly economic and fiscal upgrade paper for July-September 2023 before Parliament, predicted Sh300 billion in missed revenue targets this fiscal year if the revenue performance trend endures.
If the performance rate follows the same trend for the rest of the fiscal year, then the annual target is likely to be missed by Sh300 billion, the PBO document warns even as it attributes this to the delay in the implementation of the revenue raising measures contained in the Finance Act 2023.
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This came as the latest data from PBO, which advises Parliament and its committees on fiscal matters, indicates that the figure could go as high as Sh350 billion in missed revenue target for the present year.
Tomorrow, April 30, 2024, is the deadline for tabling the national governments budget estimates for consideration by the National Assembly.
The estimates though excludes those of Parliament and the Judiciary.
Section 37 (2) of the Public Finance Management (PFM) Act of 2012, states; the Cabinet Secretary shall submit to the National Assembly by April 30 in that year, the budget estimates excluding those for Parliament and the Judiciary.
To be tabled alongside the budget estimates is the Finance Bill 2024, which provides for the revenue raising measures to finance and therefore, implement the budget as well as the 2024 Medium-Term Debt Management Strategy (MTDMS) paper.
The adoption of the BAC report on 2024 BPS by the National Assembly in March, formed the basis for the preparation of the budget estimates.
But even as it warned the government on dangers of missed revenue targets, the committee chaired by Kiharu MP Ndindi Nyoro, approved Sh2.5 trillion as the projected expenditure for the Executive in the next financial year up from Sh2.46 trillion in the current financial year.
In such instances of reducing the countrys expenditure projections, it is the development budget that suffers.
This means that even as the government, for instance, plans expenditures under infrastructure, what would have gone towards repairs of the roads damaged by the ongoing heavy rains in the country will likely reduce.
The government is also mulling to transition all its about o
