Treasury CS Njuguna Ndungu has directed state agencies to cut expenditures after President William Ruro signed the Appropriations Bill 2024, on Friday.
President William Ruto sent a memorandum to Parliament to withdraw the Finance Bill 2024 which occasioned a deficit of Sh346 billion part of which was to be raised through tax measures in the Bill.
Ndungu said that the National Assembly has considered and approved the expenditures contained in the National Assembly Appropriations Bill No. 34 of 2024.
Earlier, Ruto signed the Appropriations Bill 2024 to allow the continuity of government operations in providing critical services.
"This has created a financing gap of Sh346 billion and implies that funding of expenditures to the tune of Sh346 billion is now not tenable," he said in a statement.
The CS said that the national treasury working with all MDAs to cut down the FY 2024-25 Budget across all activities to close the financing gap of Sh346 billion to align the Budget to the Revised Fiscal Framework.
He said that Accounting Officers are directed to limit the spending of the FY 2024-25 Budget to only critical and essential services.
Accounting Officers, he said, are directed not to exceed the spending by 15 per cent of the Appropriated Budget until the FY 2024-25 Supplementary Estimates No. I appropriated.
The CS wants Accounting Officers to ensure strict adherence to this guidance, the Public Finance Management Act, of 2012, the Public Procurement and Asset Disposal Act, of 2015, and their attendant regulations.
"Accounting Officers are also required to ensure that they bring the contents of this Warrant to the attention of all Public Officers working under them, including the Heads of Semi-Autonomous Government Agencies (SAGAs)," the CS added.
On Friday, Ruto announced that the national and county governments will face budget cuts.
Ruto said the reduction in expenditure, amounting to Sh346 billion, will be borne equitably by the National and County Governments.
"I have therefore assented to the Appropriations Bill 2024 and instructed the National Treasury to immediately prepare supplementary estimates to reduce expenditure by the amount of revenue that was expected to be generated by the rejected Finance Bill 2024," the President said.
The President added that he has directed the National Treasury to immediately submit to Parliament amendments to the Division of Revenue Act 2024 to reflect the reduced revenues occasioned by the rejected Finance Bill.
Ruto has further issued a directive that only critical and essential services are to be funded using no more than 15 per cent of the budget.
He said the directive will be enforced until the supplementary budget is approved.