A total of Sh145 billion will go towards interest rates repayment in Supplementary Estimates I for Financial Year 2023/2024, Budget and Appropriations Committee chair Ndindi Nyoro has said.
Nyoro further noted that not less than Sh10 billion will be allocated to Junior Secondary Schools and another Sh10 billion to the new university funding model.
“The interest rates market has not been kind to the country; the exchange rates too,” Nyoro told the Star.
Nyoro said they intend to increase funding to JSS ahead of school opening in January.
“The new university funding model will also get additional money because we will pay fees for 45,000 learners in total,” added the Kiharu MP.
He reiterated that the interest rates market and the performance of the shilling have not been favourable,” he said.
Interest rate is the percentage of a loan paid by borrowers to lenders. For most loans, interest is paid in addition to principal repayment.
On the other hand, first-year students in universities and Tvet institutions are awaiting the outcome of the applications seeking government financial support.
Even so, a human rights lobby group has challenged in court the higher education funding model, seeking its nullification.
Kenya Human Rights Commission (KHRC) and other petitioners argue that government agencies it has listed as respondents violated the Universities Act and grossly abused the human rights of the intended beneficiaries.
They argue the model, commonly referred to as the Variable Scholarship and Loan Funding (VSLF) is inherently discriminatory and disproportionately excludes millions of students from accessing financial support for their university education.
On October 3, the government opted to reduce the recurrent budget for each ministry by 10 per cent.
It followed a Cabinet meeting 023, chaired by President William Ruto.
"On the State of the Economy, Cabinet considered the progress being made in the implementation of the FY2023/24 Budget. Arising therefrom, and as part of the Administration's fiscal consolidation plan that seeks to contain fiscal deficit, Cabinet sanctioned the reduction of the recurrent budget of each Ministry and State Department by ten per cent. The proposed budgetary cuts will be effected as part of the Supplementary Appropriations No. I of the FY2023/24 Budget cycle," the Cabinet stated in a despatch after the meeting.
The shilling hit a record low of 150 to the dollar, exacerbating the challenges faced by the population due to high inflation and new taxes.
The decline in the shilling is attributed to factors such as high debt levels and depleted government revenues.