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Treasury lines up budgets cuts for KRA, HELB, TSC, school feeding & others

National Treasury has lined up major budget cuts in different sectors if the Finance Bill 2024 is not passed

Cabinet Secretary for the National Treasury and Economic Planning Njuguna Ndung'u.
  • The National Treasury warns of a potential revenue shortfall of Sh200 billion for the fiscal year 2024/25 if the Finance Bill 2024 is not endorsed by the National Assembly
  • Significant expenditure rationalization will be required if the bill fails to pass, affecting key government departments and state functions
  • The public reaction to the Finance Bill 2024 has been negative, leading to protests in Nairobi and Mombasa due to concerns about potential tax increases and their impact on the cost of living

Treasury CS Njuguna Ndungu's letter to the house, dated June 19, highlights a looming revenue shortfall of Sh200 billion for the fiscal year 2024/25 and underscores the need for significant expenditure rationalisation should the bill fail to pass.

The letter described the gravity of the situation, urging Parliament to consider, explaining how adjustments or failure to pass the Finance Bill 2024 will forced a review of the budget that was recently presented in the house.

Projected Revenue Shortfall

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The Treasury projects a revenue shortfall of Sh200 billion for the fiscal year 2024/25 if the Finance Bill 2024 is not approved.

This shortfall poses a significant threat to the country's financial stability and its ability to meet budgetary obligations.

Expenditure Rationalisation

In the event of the bill's rejection, the Treasury warns that there will be a need for stringent expenditure rationalisation.

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This process would affect several key government departments and state functions, potentially leading to reduced funding for critical services and development projects.

The Treasury's advisory includes a detailed table outlining the rationalisation measures across various government departments.

These measures aim to streamline operations and ensure that essential services continue to receive funding despite the anticipated revenue shortfall.

Key allocations and potential cuts include:

  1. HELB Sh3.2B
  2. Last mile connectivity Sh19B
  3. ICT Authority Sh6.7B
  4. Water works devt. Agencies Sh11.6B
  5. Galana Kulalu Sh1B
  6. KRA Sh4.7B
  7. KQ Sh1B
  8. Pending Bills Sh5B
  9. School feeding programme Sh1.8B
  10. School infrastructure Sh1.6B
  11. Counties Equitable share Sh5B
  12. Medical interns Sh3.7 billion
  13. JSS interns employment deferred Sh18.5B
  14. Cash transfers (senior citizens & vulnerable) Sh5.5B
  15. NG-CDF Sh15B
  16. State House Sh500m
  17. Executive OP Sh451m
  18. MoD (Defence) Sh7.75B
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These allocations are part of the proposed measures to manage the fiscal deficit and maintain economic stability.

However, without the endorsement of the Finance Bill, these departments could face significant budget cuts.

The public reaction to the Finance Bill 2024 has been overwhelmingly negative, with widespread protests erupting in Nairobi and Mombasa.

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Citizens are particularly concerned about potential tax increases and their impact on the cost of living.

The Treasury's detailed response seeks to address these concerns by emphasising the necessity of the proposed fiscal measures to avoid a financial crisis.

Politically, the implications are profound. The National Assembly's decision on the Finance Bill will not only affect the government's fiscal strategy but also influence public confidence in the administration.

The Treasury's advisory is a call for action, urging legislators to consider the broader economic ramifications of their decision.

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As the nation closely watches the legislative process, the ongoing public discourse and debates highlight the need for transparent, responsible governance and continuous engagement with citizens to navigate these challenging times.

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