The upshot of the budget crisis of the past two months is that there will be huge budget cuts across the board. With the dropping of the Finance Bill 2024, a lot of activities that were predicated on the tax-raising measures in the bill will have to be dropped.

The Treasury was expecting to raise an extra Kh350 billion from the new tax measures, but this will now not happen. It forced the government to undertake spending cuts of Ksh177 billion. Indeed, to reflect the new reality, the government has dropped a swathe of expenditures.

The Chief Administrative Secretary positions that were to be filled were dropped, as were the confidential budgets of the Office of the President and Deputy President. Presidential advisers are to be reduced by 50 per cent, and all non-essential travel is to be suspended. This is just among the raft of initial measures announced.

The government is now going to rely on the revenue-raising measures that are in the Finance Act 2023.

What this means is that there is going to be a lot of austerity all around. However, something very interesting has been happening. There is a new chorus of naysayers who do not want their allocations in Finance Bill 2024 (emphasis mine) to be touched. In other words, they want to eat their cake and have it.

There are several sectors on this list of shame! The most prominent are counties, with governors in an uproar over a slated reduction of Sh5 billion from the Sh400 billion they had been allocated In the dropped finance bill.

Teachers will not hear of any delays in their salary increases that were due in July 2024. This increase was predicated on the tax revenues to be raised by the bill. The Teachers Service Commission’s share of the spending cuts was Sh10 billion. Salary raises for teachers will take a hit. They will hear none of it.

This is very disingenuous. So where are the budget cuts going to come from? Who will bear the burden of the cuts? Further, these sectors are insisting on their sections of a bill that was dropped in its entirety to be implemented. Is that not hypocrisy?

This is not to say that these sectors do not need to have their demands taken into account. After all, Kenyans were not against those proposals but the controversial tax-raising measures.

But rather than making irrational demands, they should be seeking to sit down with the government and negotiate the way forward in the circumstances, to ensure that what had been given to them in the dropped bill is not washed away by the tides that drowned that bill.

One of the avenues is a phased-out approach, to agree with the Treasury on how the proposals will be accommodated going forward. Kenya is going nowhere. All must carry the burden of moving Kenya forward.

Of course, there are some expenditures that the government must ring-fence. Indeed, the government has committed to hiring 46,000 teacher interns on permanent and pensionable terms, recruiting medical interns, and retaining fertiliser subsidies, among other high priorities.  Once that is done, the remaining resources must be shared out as equitably as possible. Everybody must carry a share of the burden.

Ultimately, the aim must be a balanced budget. The Treasury must budget with the resources it has. Give each ministry its expected share of the revenues to budget against. The Kenya budgeting model is for all government ministries to hand in a wish list, which the Treasury then moves to look for revenues to fund. This is putting the cart before the horse.

The budget must be fully aligned with the growth of the economy. There is no way out of the current morass until the economy begins to grow, and an expanding and deepening tax base starts generating increased revenues for the government in the form of tax.

— gathukara@gmail.com