Ruto masterstroke as Gachagua, Mudavadi hit by huge budget cuts

President William Ruto has played a masterstroke on his deputy Rigathi Gachagua who must now accept the slashing Sh880 million from his confidential account in this year's budget.

Also to lose 50 per cent of their confidential votes are the president himself, Prime Cabinet Secretary Musalia Mudavadi and Head of Public Service Felix Koskei.

The slashed funds, added to a further Sh1 billion, will form a kitty that Ruto will channel to the Coffee Cherry Fund and the war against alcohol, as well as the planting of 10 billion trees.

The coffee farmers have been on the warpath against the government over its failure to factor in money for waiving debts owed by coffee societies in the 2024/25 Budget.

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“The rationalisation affects both the 2023/24 supplementary estimates No. II and  FY 2024/25 budgets for the respective votes: Vote 1011 Executive Office of the President , Vote 1012 Office of the Deputy President, Vote 1013 Office of the Prime Cabinet Secretary and the Vote 1017 State House,” noted Kiptoo in his presentation.

The PS  noted that the savings will be used to address the ongoing reforms in the coffee sector, the fight against illicit brew and abuse of drugs and the 10 billion tree-planting programme.

Other areas to benefit would be the enhancement of the budget for foreign missions and state visits, equity participation, appeals for reinstatement of budget cuts and address shortfalls in the education, security, governance and justice system.

Sources in the presidency say the votes affected in the cuts at the four offices amount to Sh1.8 billion.

The sources noted that in the 2024/2025 financial year, the president had directed that Treasury cuts Sh800 million from his vote, from Sh1.4billion to Sh600 million, and that of the DP would be cut from Sh1.2 billion he had requested to Sh320 million.

Mudavadi’s office will lose Sh150 million from what they had requested to Sh300 million while the office head of public service will receive Sh400 million against the Sh100 million he had requested.

The confidential vote is a discretionary fund at the behest of the holder of the office and is not subjected to any audits.

Sources indicated that the president had also asked all other departments in his office, the ministries and state departments to cut their budgets significantly, especially those of hospitality.

State House press secretary Emmanuel Tallam said the president had asked all government departments to ensure frugality in government.

“The president has insisted that all government departments must cut their expenditures and he is leading by example,” said Tallam.

In his presentation, Kiptoo noted that Treasury had received requests for additional funding amounting to over Sh17 billion since submission of the FY 2023/24 supplementary estimates.

He said that based on these additional requests, he had to amend the estimates to cater for el nino rains interventions, operationalisation of new missions abroad and state visits, shortfall in counterpart funding, medical insurance for civil servants, equity participation and re-allocations.

Kiptoo told the committee the budgets for ministries, departments and agencies (MDAs) were reduced in line with the revised fiscal framework.

The PS said the overall ministerial expenditure in the FY 2023/24 supplementary estimates has increased by 1.9 per cent.

“The recurrent expenditure increased by 9.9 per cent while the development expenditure has decreased by 13.5 per cent. This is within the 10 per cent allowable threshold for variation of a supplementary budget from the original budget as appropriated by parliament in accordance with the requirement of the Public Finance Management Act (PFMA) 2012," Kiptoo said.

In the 2024/25 financial year, the overall expenditures and the medium term budget amount to Sh3,914.2 billion.

He said the expenditure was rationalised by Sh273.3 billion from the approved 2024 budget policy statement in line with the government's fiscal consolidation policy. He explained that the allocation to the executive included the total ministerial allocation to the executive in the FY 2024/25 budget of  Sh2,243.1 billion.

In the approved 2024 budget policy statement, parliament has been allocated Sh43.6 billion while that of the judiciary, including Judicial Service Commission, is Sh23.7 billion.

Kiptoo noted that the allocation to Consolidated Fund Services (CFS) in the budget is Sh1,213.5 billion which comprised Sh750 billion for domestic interest payments, Sh259.9 billion for foreign interest payment and KSh203.6 billion for pensions, salaries and allowances.

The sharable allocation to county governments is Sh391.1 billion. This excludes conditional grants from the national government amounting to Sh54.9 billion, including loans and grants.

Kiptoo noted that the budget comes when the global economic outlook continues to recover from the various shocks. These shocks include the residue effects of COVID-19, adverse effects of climate change, conflict in Eastern Europe and Middle East and tightened monetary policies in several economies.

Global growth was projected to expand by 3.2 percent in both 2024 and 2025 with continued strengthening of the emerging market economies, particularly China and reflecting stronger-than-expected growth in the United States and and India.

The PS noted that the Kenyan economy remained resilient.