The government has revealed extensive austerity measures to cut KShs. 177bn of the KShs. 346 billion deficit in the FY 2024/5 budget after the flop of the Finance Bill 2024, President William Ruto said on Friday.
- •The new austerity measures will include dissolving 47 state corporation with overlapping roles, sending government staff who have attained 60 years to immediate retirement, abolishing office for the spouses of Prime Cabinet Secretary, Deputy President and the President.
- •He also announced suspension of CAS seats, removed budgetary provisions for confidential budgets in various executives and the budget for renovations across the government slashed by 50 per cent and reduced government advisors by 50 percent.
- •He suspended purchase of new motor vehicles by the government for 12 months, except for security agencies and ordered for development of a new policy on transport for public officers.
The government will also suspend non-essential travel for state and public officers, and ban public servants from participating in Harambees. The president directed Attorney General to prepare and submit the relevant legislation to put this into effect, and to build a mechanism for structured and transparent contributions for public, charitable, and philanthropic purposes.
“The consequence of withdrawing the Finance Bill is a reduction of our revenue targets by Ksh 346 billion,” he said, “Cutting the entire amount would significantly and drastically affect the delivery of critical government services, while borrowing would increase our fiscal deficit by a margin that would have significant repercussions on many other sectors, including interest rates and exchange rates.”
The additional borrowing will increase Kenya’s fiscal deficit from 3.3 per cent to 4.6 per cent and will be used protect the funding of critical government services such as hiring of Junior Secondary School teachers and medical interns, funding the milk stabilization program for dairy farmers, and reviving stalled roads program. The debt will also be used to provide additional funding for the higher education new model, settling arrears owed to counties, settling arrears for the NG-CDF and settling arrears for pensions.
He also announced the appointment of a taskforce to audit the public debt load and submit a report within 3 months. The Taskforce will be led by Nancy Onyango and will include representatives from ICPAK, the Law Society of Kenya (LSK), and the Institute of Engineers of Kenya (IEK)
