The cost of running government has grown at the fastest pace in six years, signaling a rising burden on taxpayers to keep public offices operating and reversing President William Ruto’s earlier gains in taming growth in day-to-day expenditures.
The Ruto administration spent slightly more than Sh1.1 trillion on salaries and wages, administration, operation, and maintenance of offices in 11 months through May 2024, according to the latest figures from the National Treasury.
The 14.12 percent climb over Sh975.12 billion in a similar period a year earlier is the biggest growth since the financial year 2017-18 when Kenya conducted historic repeat presidential elections.
The non-debt recurrent expenditures grew at a double-digit rate despite Dr Ruto’s pledge upon taking power in September 2022 to institute a raft of expenditure savings to ease the burden of funding government operations and administration.
The president’s policy of keeping a tight lid on cost of administrative and maintenance, while driving expansion in tax compliance rates, appeared to be bearing fruit after recurrent expenditure dropped a marginal 4.44 percent to Sh975.12 billion.
“The Kenyan government had initially made good progress in tackling the poor public finances,” Jason Tuvey, deputy chief emerging markets economist at UK-based Capital Economics, wrote in a note on Kenya this week.
“There have been signs of fiscal slippage recently, though, as spending has increased and revenues have underperformed. That spurred the government, in the 2024/25 Budget, to outline a raft of tax increases in a bid to get its fiscal consolidation plans back on track.”
The Treasury data shows taxes grew at a slower rate of 10.83 percent year-on-year to Sh1.93 trillion than that in non-debt recurrent expenditure in the 11 months ended May.
The Ruto administration’s plan to make up for slower growth in taxes than expenditure through Finance Bill 2024 was this week thwarted by youth-led demonstrators who poured onto the streets of cities and major towns countrywide saying additional taxes will exacerbate an already unbearable cost of living.
Dr Ruto was banking on the new taxes which targeted Sh346 billion in new revenue and expenditure cuts largely targeting non-essential expenditures such as hospitality and renovation of offices as well as slashing allocations for Semi-Autonomous Government Agencies to place the country on the path to a balanced budget by year 2027.
Analysts have, however, insisted that Kenya has an “expenditure problem and not a tax problem”, indicating that the government needs to tame its spend further to achieve a balanced budget where borrowing is kept at minimal levels.
International Budget Partnership's Country Manager for Kenya Abraham Rugo has cited supplementary budgets to cater for expenses that were not initially budgeted as the main driver of non-debt expenditures.
“Governments are meant to exist and deliver services perpetuity which means that as the size of government grows, recurrent expenditures are likely to increase indefinitely,” Dr Rugo said.
“However, this does not mean that there are no wastages or inefficiencies in the public sector that drive a wedge between productivity and compensation (wages).”
State House, which has been undergoing a major renovation this financial year, has been the largest beneficiary of mini-budgets. Treasury data shows expenditure at the State House had exceeded the original full-year budget by about half (49.20 percent) in the 11-month through May to Sh9.5 billion.
Others are the State Department for the Asals and Regional Development which had spent 29.87 percent over initial annual budget of Sh12.01 billion in the review period.
