In his address to a joint Parliamentary sitting on Thursday, President Ruto said the reduction of spending is pegged on reducing the government’s borrowing needs from an estimated Ksh.900 billion in the fiscal year to close the financing hole.
“We should never borrow to finance recurrent expenditure. It is not right, prudent or sustainable. It is simply wrong. We must bring ourselves and our country to sanity,” President Ruto told MPs and Senators.
“To this end, I have instructed Treasury to work with Ministries to find at least Ksh.300 billion in this year’s budget so that we can remove it because the market cannot sustain the kind of borrowing we are doing as government.”
According to data from the National Treasury, spending across the 2022/23 financial year has been estimated at Ksh.3.358 trillion against revenues projected at just Ksh.2.462 trillion.
This to leave behind a financing hole estimated at Ksh.862.9 billion to be plugged through Ksh.280.7 billion in next foreign financing and Ksh.582.2 billion in net domestic financing.
Of the Ksh.3.4 trillion budget, Ksh.2.271 trillion is estimated to be recurrent expenditure which includes spending by ministries apart from capital allocations.
Without the proposed budget cuts, Kenya’s public debt is expected to rise from Ksh.8.6 trillion at the end of June this year to Ksh.9.4 trillion by June of 2023 leaving a sum of just under Ksh.600 billion to the Ksh.10 trillion debt ceiling.
On revenue mobilisation, President William Ruto has proposed reforms to the taxation system including a culture change by the Kenya Revenue Authority (KRA).
“The tax burden must reflect ability to pay. Those at the bottom of the pyramid should pay what is proportional. We will be proposing tax measures that begin to move us towards the right direction," President Ruto added.
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