Treasury Cabinet Secretary Njuguna Ndung’u is set to present the first budget under President William Ruto’s administration on Thursday.
The omnibus budget, estimated at Sh3.599 trillion, is the largest in Kenya’s history and will outline the government’s spending plans for the financial year starting July 1.
The new government plans to spend an additional Sh240.7 billion more than its predecessor, with higher revenues expected to support this increase.
Total revenues are projected to rise by more than Sh431 billion to Sh2.894 trillion from an estimate of Sh2.529 trillion at the start of the last financial year.
To boost revenue collection, the Kenya Kwanzaa administration will implement new tax policy measures, including a national tax policy based on certainty and consistency in tax legislation and management of tax expenditure.
Technology will also be leveraged to integrate the Kenya Revenue Authority’s (KRA) tax systems with those of taxpayers.
On the expenditure side, President Ruto’s administration has increased spending across various sectors as it implements its bottom-up economic transformation agenda.
Key focus areas include agriculture, micro, small and medium enterprises, housing, settlements, healthcare and creative industries.
The new government has outlined plans to prioritise funding from cheap external sources such as the International Monetary Fund and World Bank to manage borrowing costs over its term.
Non-concessional or commercial external borrowing will be limited to projects with high financial and economic returns in line with its economic transformation agenda.
In contrast to his predecessor’s last budget which focused on supporting manufacturing to create jobs, improving food security, providing universal health coverage and affordable housing; Dr Ruto’s first budget seeks key expenditure reforms aimed at improving public spending efficiency by eliminating non-priority spending and phasing out expensive consumption subsidies while increasing public-private partnership financing for commercially viable projects.
Recurrent spending in Ruto’s first full budget is expected to increase by Sh206.6 billion to Sh2.478 trillion, while development spending is set to increase by Sh12.5 billion to Sh689.1 billion.
Transfers to counties are also set to increase by Sh22.7 billion.
The new administration has projected a rare reduction in borrowing as it relies on higher revenue collection to meet its spending needs.
The fiscal balance after grants has shrunk from Sh862.9 billion previously to Sh663.5 billion, with net external borrowing expected to fall and domestic borrowing excluding debt repayments also expected to decrease. “The government will maximise the use of official external sources for loans on concessional terms, while non-concessional or commercial external borrowing will be limited to projects with high financial and economic returns in line with the bottom-up economic transformation agenda,” said the Treasury in its budget summary for the 2023-24 financial year.
