Finance Bill withdrawal triggers proposed budget cuts and legislative challenges.

  • 28 Jun 2024
  • 3 Mins Read
  • 〜 by James Ngunjiri


On June 26, President William Ruto presented a memorandum to Parliament formally withdrawing the controversial Finance Bill, 2024, which would have become law after 14 days without it.

In his memorandum, President Ruto said that taking into consideration the widespread public dissatisfaction with the content of the Finance Bill, 2024, and in the exercise of the powers conferred to him by Article 115(1)(b) of the Constitution, he had declined to assent to the Bill.

“I decline to assent to the Finance Bill, 2024, and refer the Bill for reconsideration by the National Assembly with the recommendation for the deletion of all clauses thereof,” he said in the Presidential Memorandum of Referral.

What next?

The Bill will be referred back to the National Assembly with a memorandum detailing reasons for declining to assent it into law. The leader of the Majority Party in the 13th Parliament, Kimani Ichung’wa, will move a motion seeking the House’s concurrence with the President’s recommendations as provided under the Standing Orders. Then, a resolution will be passed that will see the Bill withdrawn in its entirety.

From July 1, the government will continue collecting revenue under the Finance Act of 2023, which is already in place.  

According to economists, the controversial Finance Bill, 2024, was not meant to raise the 2024/25 financial year government revenue of KSh3.4 trillion; rather, it contained tax measures intended to raise an additional tax of KSh346 billion only. Hence, the Kenya Revenue Authority (KRA) will continue collecting the targeted KSh3.4 trillion, less the KSh346 billion.

However, the government will find itself unable to legislate a new Appropriation Act, which is the written law that guides spending in the absence of a Finance Act. This is because, in 2023, a High Court ruling underlined that the revenue-raising measures must first be approved before the Appropriation Bill is introduced in the National Assembly.

Proposed expenditure cuts

Since the revenue-raising measures in the Finance Bill, 2024, were not approved, there will likely be a revenue shortfall of approximately KSh200 billion.

In order to remain within the provisions of Section 40(5)(a) and Section 50 of the Public Finance Management Act (PFMA), 2012 Cap. 412A—an Act of Parliament that provides for the effective management of public finances by both the national and county governments—the National Treasury proposed measures that will see general expenditure cuts across the three arms of government.

These proposed budget reductions will necessitate amendments to the Appropriations Bill, 2024, following the withdrawal of the Finance Bill, 2024.

The following are the proposed reductions in the budget that will necessitate amendments to the Appropriation Bill.

Operations under the Office of the President KSh451 million
Operations under the State House KSh500 million
Security operations under Internal Security KSh2 billion
Reduction in the budget for various RDAs KSh4.6 billion
Security operations and modernisation under the Ministry of Defence KSh7.75 billion
Foreign relations and diplomacy KSh1.85 billion
Ongoing TVETs and TTIs projects KSh800 million
Funding for the Differentiated Unit Cost model in universities KSh2.1 billion
Higher Education Loans Board (HELB) KSh3.2 billion
University infrastructure projects KSh3 billion
Infrastructure for primary and secondary schools KSh1.6 billion
School feeding program KSh1.8 billion
Kenya Revenue Authority (KRA) KSh4.7 billion
Kenya Airways (KQ) KSh4.7 billion
Civil Servants Insurance Scheme KSh1 billion
Equalisation Fund arrears KSh1 billion
Pending Bills KSh5 billion
NGCDF KSh15 billion
Provision for Medical Interns KSh3.7 billion
Managed Equipment Service (MES) under the State Department for Medical Services KSh1 billion
Ongoing roads projects KSh15.1 billion
Construction of markets KSh2.1 billion
Various irrigation projects KSh3.7 billion
Galana Kulalu irrigation project KSh1 billion
Various projects under the water works development agencies KSh11.6 billion
Land resettlement KSh1 billion
ICT Authority KSh6.7 billion
Sports academies KSh1.8 billion
State Department for Energy, cancellation of the KSh50 million per constituency last mile connectivity and other interventions KSh14.5 billion
Last-mile connectivity and street lighting KSh7.27 billion
Deferment of the livestock restocking KSh1 billion
Fertiliser subsidy (farmers to pay more) KSh5 billion
Arrears to farmers under sugar reforms KSh1.7 billion
New KCC mop-up of milk KSh1 billion
Coffee cherry fund KSh1 billion
County Aggregation Industrial Parks KSh1.6 billion
Cash transfer program KSh5.5 billion
NGAAF recurrent KSh900 billion (provision of sanitary towels) and development KSh600 million
Ethics and Anti-Corruption Commission (EACC) KSh200 million
Office of the Director of Public Prosecutions (ODPP) KSh195 million
Political parties fund KSh900 million
Tree planting KSh1 billion
National Lands Commission KSh90 million
Independent Electoral and Boundaries Commission (IEBC) KSh185 million
Commission on Revenue Allocation (CRA) KSh20.65 million
Public Service Internship program KSh1 billion
Salaries and Remuneration Commission (SRC) KSh23.6 million
Deferment in confirmation of interns to permanent & pensionable and hiring (JSS) KSh18.9 billion
National Police Service Commission (NPSC) KSh50 million
The Auditor General KSh410 million
Office of Controller of Budget (COB) KSh37 million
Commission on Administrative Justice KSh33 million
National Gender and Equality Commission (NGEC) KSh21.25 million
Independent Policing Oversight Authority (IPOA) KSh55 million
Judiciary recurrent budget KSh2 billion
Parliament – domestic travel, foreign travel, reversal of office operations and salary increment for staff, Bunge Towers and CPST project KSh3.15 billion
County Equitable Share KSh5 billion