Key Highlights of Proposed Changes in Kenya’ First Supplementary Budget For FY 2023/2024

9th November 2023

Kenya's National Treasury tabled the first Supplementary Budget for the FY 2023/2024 in October of this year. Supplementary budgets are revised budgets prepared during a financial year that adjust revenue and expenditure in response to eventualities that occur during the implementation stage of the budget cycle. In essence, these budgets sum up the in-year adjustments made to different government programmes under the various Ministries, Departments & Agencies (MDAs).

?The budgeting process, especially at the formulation and approval stage, aims to align priorities with funding and fiscal policies. However, even in the most watertight fiscal systems, unanticipated scenarios will require the government to review its approved budget and to make some adjustments in-year.

?Key highlights of the first supplementary budget for FY 2023/2024

Overall the revised budget for the FY 2023/24 proposes an increase in voted expenditure from Ksh. 2.37 trillion as approved in June 2023 to 2.41 trillion – marking a Ksh. 41 billion increase in expenditure just four months since the start of the financial year.?

The changes show that 32 ministries, departments, and agencies (MDAs) will have their allocations increased while 45 will have their allocations reduced, an increase in number of cuts and increases to MDA budgets as seen the most recent Supplementary Budget II of FY 2022/23.

Among the notable trends in the Supplementary Budget, I FY 2023/24 is the cuts in Foreign Travel and Subsistence across State Departments. For instance, overall expenditure on Foreign Travel and Subsistence, and other transportation costs for the National Assembly fell by 46% from Kshs. 1.44 billion to Kshs. 0.78 billion.

?Key Sectoral Changes

The education sector’s budget is proposed to increase by 14% or Kshs. 62.2 billion in absolute terms. The largest proportion of this increase is with the State Department for Higher Education and Research which takes up 47% of this increase, and is on account of additional allocations to the Higher Education Learning Board and University Funding Board. ?

?Research done by IBP Kenya shows that the health sector is prone to budget cuts upon the introduction of supplementary budgets. True to this trend, the health sector saw its budget slashed by Kshs. 2.54 billion in the Supplementary I of FY 2024/24. Specifically, the State Department for Medical Services will see its allocated expenditure shrink by Kshs. 5.46 billion or 5%, from Kshs. 116.6 billion in the Approved Estimates of FY 2023/24 to Kshs. 111.1 billion in Supplementary I FY 2023/24.?

?Despite the recent Health laws brought into effect relating to digital health and the establishment of an Emergency Medical Treatment Fund, the Digital Health Platform and Emergency Medical Treatment Fund under the BETA agenda received cuts of Kshs. 0.172 billion and Kshs. 0.2 billion respectively.?

?In addition, the proposed revied budget shows notable increase in allocations to various state corporations in the Water and Sanitation Sector e.g., Kenya Water Institute, alongside significant cuts in number of development project.??On the other hand, the State Department for Social Protection shows cuts to targeted beneficiaries’ under cash assistance programmes of almost half i.e., Orphaned and Vulnerable Children and Persons with Disabilities despite an only slight decrease in allocation to the cash transfers budget line of 0.09%?

At a time when Kenyans are increasingly turning to credit to meet their daily needs, the State Department for Micro, Small and Medium Enterprises Development will see its budget cut by 37%, with the Hustler Fund receiving a Ksh. 5 billion decrease in its allocation.?

The Supplementary I budget also shows an increase in government expenditure on the public debt obligations by Kshs. 240 billion, bringing the total public debt servicing for the FY 2023/24 to Kshs. 1.86 trillion. At the current projected revenue collection targets, this increase means that ?that 71 out of every 100 shillings collected in ordinary revenue will go to servicing debt, up from 63 shillings in June 2023.

?What next?

Since the parliamentary committee is mandated to meet the different sectors, we urge all the interested groups to reach out to their specific sectors for conversations on the revised allocations.

IBP will also consolidate all the issues raised in the public forum on the supplementary budget and submit a memorandum to the Budget and Appropriations Committee of the National Assembly.