How Mbadi sneaked back, surpassed rejected 2024 budget

Bit by bit, the government has stealthily padded up its budget, erasing the deductions it effected following the rejection of the Financial Bill 2024, and even surpassing the original Sh3.59 trillion budget for the 2024-25 year.

The Finance Bill was passed by parliament on June 25 last year as the country was burning amid protests ="https://www.standardmedia.co.ke/national/article/2001522304/protest-anthems-that-fueled-gen-z-revolt-and-birthed-a-movement">mounted by Gen Z<, which were violently dispersed by security agents leading to the death of 19 people. 

However, President William Ruto was forced to reject it, and even sacked all Cabinet secretaries, except Musalia Mudavadi, to calm the agitated protestors who were calling for the taming of government spending and ballooning debt. 

He also ordered all government ministries and agencies to review their budgets and adjust to the lower revenue due to the failed additional taxes that were expected to rake in about Sh340 billion. 

But data from the National Treasury now shows that with the third supplementary budget ="https://www.standardmedia.co.ke/national/article/2001522234/government-seeks-additional-sh189-billion-to-fund-shortfalls-in-2024-2025-fy-budget">tabled last week<, the total expected expenditure for the 2024-25 financial year has shot up to Sh3.61 trillion, surpassing the Sh3.59 trillion budgeted before the scrapping of Finance Bill 2024.

According to the Supplementary Estimates III report tabled before the National Assembly, the total expenditure budget for the period under review will increase by Sh22.4 billion as the government seeks the billions to address revenue shortfalls.

Interestingly, this money must be absorbed in less than 10 days before the expiry of the current financial year on June 30.

The report by the National Treasury highlights that despite ="https://www.standardmedia.co.ke/business/business/article/2001518028/rutos-no-tax-finance-bill-to-raise-cost-of-affordable-housing-project">cutting the initial budget< following the Gen Z protests last year, the expenditure has gradually been increased through mini-budgets.

Parliament had initially approved an original budget of Sh3.59 trillion inclusive of the Ministerial National Government Expenditure for both recurrent and development, and Consolidated Fund Services (CFS).

But in the wake of deadly protests by the youth who were against increased external borrowing, corruption and increased perks for the political class among others, President Ruto directed its reduction to Sh3.47 trillion. This was done through the introduction of the Supplementary Estimates I.

And in March this year, the National Treasury introduced the Supplementary Estimates II, which increased the budget to Sh3.58 trillion, which was still lower than the original budget figure.

However, last week, Treasury Cabinet Secretary John Mbadi introduced the Supplementary Estimates No. III before the House, which will lead to an increment of the budget to Sh3.61 trillion.

This means that the National Treasury will now have to borrow funding either locally or externally to address the revenue gaps in the budget.

According to the report, the government was grappling with a Sh253 billion ="https://www.standardmedia.co.ke/national/article/2001476280/blow-to-ruto-after-court-suspends-finance-act"> revenue shortfall Mbadi, in the report, clarified that the current budget estimates were prepared to allow additional expenditure for both government and development partners, allow reallocations, provide for compensation to employees (personal emoluments) and gratuity, take care of adjustments of receipts of Appropriation in Aid (AIA) and re-align budgetary provisions to projected levels of absorption.

He further admitted to challenges in resource raising during the 2024/2025 FY.

“Since the approval of the financial year 2024-25 Supplementary Estimates II, the National Treasury has received additional requests for funding to cater for emerging priorities and shortfalls under critical expenditures," the CS said.

"Included in the Financial year’s Supplementary Estimates No III is additional expenditure to cater for salaries shortfall, security-related interventions, among other emerging priorities.” 

Under Article 223 of the Constitution, Treasury can spend money above the approved budget but later seek Parliament's approval through a supplementary budget. 

From the Treasury report, ministries, departments and agencies (MDAs) that benefited from the increased funding include State House, which got an additional Sh3.7 billion for operations and maintenance, State Department of Higher Education Sh3.66 billion, National Treasury Sh5.85 billion, State Department for Social Protection and Senior Citizens Affairs Sh 12.46 billion and the National Intelligence Service (NIS) Sh3 billion.

The Teachers Service Commission (TSC) got an additional Sh3.3 billion, State Department for Sports Sh1.7 billion to facilitate the CHAN Hosting Rights, State Department for Housing & Urban Development Sh 7.75 billion for the Kenya Informal Settlement Improvement Project - Phase II, the State Department for Water & Sanitation Sh3.08 billion, and State Department for Lands and Physical Planning Sh 1 billion.  

The  State Department for Information Communication Technology and Digital Economy got an extra Sh2.21 billion.

However, the State Department for the Blue Economy and Fisheries got a Sh1. 2 billion reduction in funding, State Department for Irrigation Sh1.42 billion, State Department for Transport Sh1.29 billion, State Department for Roads Sh11.7 billion, while the State Department for Medical Services lost an earlier allocation of Sh1.9 billion.

The State Department for Economic Planning also lost Sh12.01 billion, State Department for Basic Education Sh2.28 billion, whereas Sh1.3 billion was moved from the State Department for the ASALs and Regional Development.

The Supplementary III comes two months after the National Treasury in March approved additional expenditure of Sh34 billion under Article 223 of the constitution.

It comprised Sh28.5 billion under recurrent expenditure and Sh5.5 billion under development.