President William Ruto has announced substantial budget cuts totaling KES 346 billion after rejecting the Finance Bill 2024, urging the National Treasury to prepare immediate supplementary estimates and directing a significant reduction in government expenditure.
In a decisive move on Wednesday, June 26, 2024, President William Ruto rejected the Finance Bill 2024, resulting in comprehensive budget cuts across all levels of government. The President’s decision to send a memorandum to the National Assembly rejecting all clauses of the bill has necessitated urgent fiscal adjustments.
“Articles 221 and 222 of the Constitution require that the Appropriations Bill be assented to by the 30th of June every year to guarantee the continuity of government operations, especially in providing critical services,” President Ruto stated. Consequently, he assented to the Appropriations Bill 2024 and mandated the National Treasury to prepare supplementary estimates to account for the revenue shortfall caused by the rejected Finance Bill.
The proposed reduction in expenditure, amounting to KES 346 billion, will be distributed equitably between the National and County Governments. Within the National Government, this cut will impact the executive, the legislature, the judiciary, and constitutional commissions.
“I have referred the County Allocation and Revenue Bill, which was based on expected revenues from the rejected Finance Bill, back to Parliament for reduction accordingly,” President Ruto added, indicating a clear directive to adjust financial allocations in light of the revised revenue projections.
Further, the President has instructed the National Treasury to submit amendments to the Division of Revenue Act 2024 to Parliament. These amendments are designed to reflect the reduced revenues following the Finance Bill’s rejection, ensuring that the nation’s financial legislation aligns with the current fiscal reality.
To manage the immediate impact of these changes, President Ruto has directed all accounting officers to prioritize funding for critical and essential services. “I have instructed the National Treasury to direct all accounting officers to ensure that only critical and essential services are funded, using no more than 15% of the budget, until the supplementary budget is approved,” he emphasized. This directive aims to maintain essential government functions while the supplementary budget is being prepared and approved.
The rejection of the Finance Bill 2024 marks a significant moment in Kenya’s fiscal policy, with President Ruto’s administration facing the challenge of balancing the budget while maintaining essential services. The President’s decisive action reflects his commitment to constitutional mandates and fiscal responsibility, setting a precedent for transparent and accountable governance.
The National Assembly now faces the task of revising the financial framework to accommodate these changes. As Kenya navigates this period of fiscal adjustment, the focus will remain on sustaining critical services and ensuring equitable distribution of resources across both national and county levels.
