Budget Bombshell: Mystery Ksh.45B Gap Forces VAT Slash
The Budget Policy Statement has brought to light a perplexing discrepancy and contradictory information in the numbers related to the overall budget for the upcoming fiscal year.
The amount for the financial year 2024/2025 is documented differently on two pages, with one indicating Ksh.4.1882 trillion and the other noting Ksh.4.143 trillion, resulting in a notable difference of approximately Ksh.45 billion.
On page 51 of the budget policy statement, the Treasury says, “In nominal terms, the overall expenditure and net lending is projected at Ksh.4.188.2 trillion” while on the next page, another statement reads in part “The total budget for FY 2024/25 is projected at Ksh.4.143.7 trillion.”
Additionally, the sum of the anticipated allocations is Ksh.4.1437 trillion, not the Ksh.4.1882 trillion mentioned on page 51.
In the 2024/2025 fiscal year, the government anticipates generating approximately Ksh.2.94 trillion through taxation, an additional Ksh.486 billion through appropriation in aid, and Ksh.49 billion from grants.
This results in a shortfall of approximately Ksh.703 billion, necessitating the government to seek loans. The government plans to secure Ksh.326.1 billion from external sources and Ksh.377.7 billion domestically.
The focus of the spending will be on prioritizing the allocation of Ksh.2.51 trillion in the national government budget.
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The Consolidated Fund Services, responsible for managing debt repayment and pensions, has been allocated Ksh.1.2 trillion, and county governments are anticipated to receive Ksh.391 billion.
Ndindi Nyoro, the Chairperson of the Budget and Appropriations Committee, asserts that the government is once more emphasizing the importance of debt repayment as a means to revive economic growth.
“Consolidated Fund Services, which this year we have increased to among the highest figures we have ever given, to over Ksh.1.2 trillion…the reason we are doing this is because we also want to continue offsetting our debts promptly so that the stability of our country in terms of the macros can also be guaranteed,” he said.
At the same time, the Finance and National Planning Committee has submitted a proposal to the Budget and Appropriations Committee to reduce specific taxes.
“We are also having a discussion about reducing corporation tax from 30% to 25%, and this again is an ongoing discussion…hopefully this will see an attraction of foreign direct investment and also this will see most businesses formalize. There’s also a discussion about reducing VAT…VAT is at 16% and the plan is to gradually reduce the VAT to a figure that we are still doing research, and there is a team from KRA and National Treasury that is looking at the numbers,” said Kuria Kimani, Chairperson, Finance and National Planning Committee.
The inconsistencies found in the Budget Policy Statement for the fiscal year 2024/2025 have sparked notable worries regarding the precision and openness of the government’s financial planning.
Budget Bombshell: Mystery Ksh.45B Gap Forces VAT Slash