Ministries suffer Sh96bn cuts to fund urgent budgets

NIS among top losers with a reduction of its recurrent budget by Sh10 billion

In Summary
  • Experts have warned that the cuts may end up being counterproductive.
  • Cash-strapped universities' budgets have also been reduced by Sh2.3 billion
National Treasury and Planning CS Njuguna Ndung'u
FIXING ECONOMY: National Treasury and Planning CS Njuguna Ndung'u

A number of ministries, state departments and agencies have suffered cuts in new budget realignments under consideration by Parliament.

The development budget has been reduced by Sh96 billion in the proposed mini-budget drawn by the Cabinet Secretary Njuguna Ndung'u-led National Treasury.

The cuts have also affected recurrent budgets by ministries to the tune of Sh55 billion, including Sh10 billion for the National Intelligence Service.

Recurrent budget for the Energy department was also slashed by Sh3 billion, Sh3 billion in the case of Foreign Affairs, Sh1.8 billion in respect of the Independent Electoral and Boundaries Commission, and Sh1.3 billion for the Health ministry.

The Interior ministry lost the biggest chunk at Sh28 billion, ostensibly in the granting of autonomy to the National Police Service.

Infrastructure, water, and energy projects have taken the biggest hit after losing billions that were proposed in the 2022-23 financial year budget.

In the new provisions, the infrastructure budget has been slashed by Sh20.6 billion, energy by Sh13.2 billion, and water by Sh12 billion affecting various water projects.

Budget for the National Treasury has also been reduced by Sh16.3 billion while that of Housing is down by Sh7.8 billion, affecting affordable housing projects.

Development projects undertaken by cash-strapped universities have also been reduced by Sh2.3 billion in the mini-budget before MPs.

The Health ministry has also suffered cuts with the proposed reduction of Sh1.2 billion from its provisions for the year.

Cuts have also been effected in the Lands budget to the tune of Sh1.2 billion with ICT suffering the same at Sh2.7 billion.

Funding for projects by the fisheries department have also been reduced by Sh4 billion and that of industrialisation by Sh2.1 billion.

Interior was not spared in the cuts and is tipped to lose Sh2.4 billion of its development budget, Sh1.1 billion for TVETs, and Sh1.05 billion for the case of the Livestock department.

Budgets for the Ministry of Foreign Affairs has been slashed by Sh700 million, Sh938 million for Environment, Sh400 million for Correctional Services, Sh434 million for Planning department, Sh518 million for public works, and Sh527 million for Broadcasting department.

Development budget for the Trade ministry is also down by Sh243 million, Sh576 for the case of Petroleum and Mining, Sh500 million for the Wildlife department, and Sh503 million for Youth Affairs.

The cuts have also affected projects by the EACC at Sh74 million, Sh90 million for the National Land Commission, Sh30 million for the Teachers Service Commission, and Sh62 million for the Attorney General’s office.

On the contrary, a number of ministries have had their development budget increased to the tune of Sh56 billion including the Office of the President which is tipped for Sh1.3 billion more.

Others are the Basic Education department whose development budget has been increased by Sh8.1 billion, Sh2.6 billion for the newly created Public Health and Professional Standards department, and Sh19 billion for Cooperatives department—largely for the roll out of the Hustler Fund.

Also set for a raise are the Crops department at Sh21 billion—largely for fertilizer subsidies, Sh1.3 billion for Transport department, and Sh1.3 billion for Irrigation department.

Another Sh289 million has been injected into the Forestry department, Sh206 million for development of ASAL regions, and Sh55 million for Investment Promotion department—also new.

The proposals are among the top businesses scheduled by MPs as they resume sittings on Tuesday.

Experts at the Parliamentary Budget Office, however, raised concerns that the budget cuts would be counterproductive.

“The economy requires injections into the financial system. The strategy adopted by the new administration of fiscal consolidation is in contrast,” the PBO said.

In a new report before Parliament, the team adds, “Reducing government expenditure will invariably lead to lower output.”

In this regard, the experts want the government to explore policy options that would achieve fiscal consolidation in a way that does not harm economic growth.

“This includes focusing more on productivity increases and efficiency in the use of resources as well as empowering the private sector to drive economic growth,” they advised.

PBO further warned that a blanket reduction in budgets relating to expenditures may lead to legal costs and penalties associated with breach of contract.

“Caution should be taken while implementing the fiscal consolidation strategy to avoid such legal risks,” the team said, adding that the conventional approach may stage political costs too.





-Edited by SKanyara

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