Kenya’s budget to drop 9% to Ksh.3.01 trillion as Ruto rethinks strategy to shrink debt
Kenya’s 2022/23 National Budget will drop by 9 percent to Ksh.3.01 trillion from the current Ksh.3.31 trillion as President William Ruto rethinks strategy to lower the cost of debt repayment.
The slash will take a toll on the ministries and the President has already instructed the National Treasury to work with them to do away with Ksh.300 billion from the current budget.
All the 22 ministries will be forced to narrow their spending as the new regime prioritises agenda to save millions of suffering Kenyans due to lack of food, water and ballooning unemployment rate.
“I have instructed the National Treasury to work with ministries to find savings of Ksh.300 billion in this year’s budget. Next year, we will bring it further down so that, by the third year, we have a recurrent budget surplus,” said the President.
The president is keen to bring down the debt burden beginning next year and said the government should never borrow to finance recurrent expenditure – “the market cannot sustain the kind of borrowing we are doing as a government”.
Kenya’s debt hit Ksh.8.5 trillion from both foreign and domestic borrowing, with the President optimistic that in the third year of his reign, he would have narrowed the burden to ensure an existing recurrent budget surplus.
“Over the next three years, we must reverse this and go back to the situation where government contributes to the national savings effort by keeping recurrent expenditure below revenue.”
The Ksh.300 billion slash from the 2022/23 budget will revise the annual budget to Ksh.3.01 trillion from Ksh.3.31 trillion.
A friendly-tax regime also played key in his maiden speech to the joint sitting of the bicameral house at the National Assembly.
“This is best achieved by a hierarchy that taxes wealth, consumption, income, and trade in that order of preference. Our tax regime currently falls far short of this. We are over-taxing trade and under-taxing wealth. We will be proposing tax measures that begin to move us in the right direction.”
He also indicated that the government will also work with the Kenya Revenue Authority (KRA) on a culture change to make it a people-friendly, customer-centric organisation.
He also said he will see through the current Kenya Revenue Auhtority (KRA) renamed Kenya Revenue Service (KRS).
“I am of the view that we should rename it the Kenya Revenue Service in line with the proposed transformation.”