Business

Treasury to spend Sh2.9 trillion on recurrent costs

Monday, February 19th, 2024 08:46 | By
Bulk of the revenue, projected at Sh2.9 trillion, to be sourced from ordinary revenue, representing 16.4 per cent of the GDP. PHOTO/Print
Bulk of the revenue, projected at Sh2.9 trillion, to be sourced from ordinary revenue, representing 16.4 per cent of the GDP. PHOTO/Print

The Kenya Kwanza government has unveiled its fiscal blueprint for the year 2024/25, presenting a National Budget, inclusive of Appropriation-In-Aid (AIA), estimated at a substantial Sh3.4 trillion.


This amount, constituting 19.1 per cent of the Gross Domestic Product (GDP), reflects a marginal reduction from the previous fiscal year’s budget of Sh3.7 trillion or 22.6 per cent of GDP, as outlined in the budget policy statement (BPS) issued by the National Treasury and Economic Planning ministry.


The BPS received Cabinet approval on February 14 and was subsequently submitted to Parliament on February 15.


Contigency Funds


The bulk of the revenue, projected at Sh2.9 trillion, is anticipated to be sourced from ordinary revenue, representing 16.4 per cent of the GDP. Conversely, total expenditure is forecasted to reach Sh4.2 trillion, equivalent to 23.2 per cent of the GDP.

This expenditure encompasses recurrent costs of Sh2.9 trillion (15.9 per cent of GDP), development expenditure of Sh887.8 billion (4.9 per cent of GDP), and a transfer to County Governments totalling Sh446 billion. The latter includes Sh391.1 billion for equitable share and an additional Sh54.9 billion in allocations. Additionally, Sh5 billion has been earmarked for the Contingency Fund.


The fiscal deficit, inclusive of grants, is projected to amount to Sh703.9 billion, or 3.9 per cent of the GDP. This deficit will be offset by a net external financing of Sh326.1 billion (1.8 per cent of GDP) and a net domestic financing of Sh377.7 billion (2.1 per cent of GDP).


The budget ceilings for the fiscal year are set at Sh2.5 trillion, comprising Sh1.7 trillion in recurrent expenditures and Sh853.9 billion in development expenditure. This represents a significant uptick from the development budget of Sh718.9 billion in the fiscal year 2023/24.


“Given the constraints of limited resources, the firm fiscal ceilings outlined for the fiscal year 2024/25 and the medium-term budget will serve as the foundation for detailed budget allocations to be presented to Parliament by April 30, 2024,” stated the treasury.


Treasury emphasised that the fiscal policy stance for the Financial Year 2024/25 and the medium-term budget will bolster the Bottom-Up Economic Agenda (BETA) through a growth-friendly fiscal consolidation plan.

“As part of this endeavour, the Government is undertaking the implementation of the National Tax Policy and the Medium-Term Revenue Strategy (MTRS), which aim to further strengthen tax revenue mobilisation efforts to surpass 20 percent of GDP over the medium term,” said the statement.


Moreover, tax administration by the Kenya Revenue Authority will be fortified through the expanded use of technology to curb leakages. This entails enhancements of iTax and Integrated Customs Management System (iCMS) alongside the utilisation of the Tax Invoice Management System (e-TIMS).

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