What next? Kenya withdraws Finance Bill 2024 after unrest

On June 26, President William Ruto presented a memorandum to Parliament formally withdrawing the controversial Finance Bill 2024, which would have become law after 14 days without it.

In his memorandum, President Ruto said that he had declined to assent to the Finance Bill 2024, taking into consideration the widespread public dissatisfaction with its content and exercising the powers conferred to him by Article 115(1)(b) of the Constitution.

“I decline to assent to the Finance Bill, 2024, and refer the Bill for reconsideration by the National Assembly with the recommendation for the deletion of all clauses thereof,” he said in the Presidential Memorandum of Referral.

What next?

The Bill was referred back to the National Assembly with a memorandum detailing reasons for declining to assent it into law. The leader of the Majority Party in the 13th Parliament, Kimani Ichung’wa, will move a motion seeking the House’s concurrence with the President’s recommendations as provided under the Standing Orders. Then, a resolution will be passed that will see the Bill withdrawn in its entirety.

From July 1, the government is expected to continue collecting revenue under the Finance Act of 2023, which is already in place.  

According to economists, the controversial Finance Bill 2024 was not meant to raise the 2024/25 financial year government revenue of KSh3.4 trillion; rather, it contained tax measures intended to raise an additional tax of KSh346 billion only. Hence, the Kenya Revenue Authority (KRA) will continue collecting the targeted KSh3.4 trillion, less the KSh346 billion.

However, the government will find itself unable to legislate a new Appropriation Act, which is the written law that guides spending in the absence of a Finance Act. This is because, in 2023, a High Court ruling underlined that the revenue-raising measures must first be approved before the Appropriation Bill is introduced in the National Assembly.

Proposed expenditure cuts

Since the revenue-raising measures in the Finance Bill 2024 were not approved, there will likely be a revenue shortfall of approximately KSh200 billion.

In order to remain within the provisions of Section 40(5)(a) and Section 50 of the Public Finance Management Act (PFMA), 2012 Cap. 412A – an Act of Parliament that provides for the effective management of public finances by both the national and county governments, the National Treasury proposed measures that will see general expenditure cuts across the three arms of government. These proposed budget reductions will necessitate amendments to the Appropriations Bill 2024 following the withdrawal of the Finance Bill 2024.

The following are the proposed reductions in the budget that will necessitate amendments to the Appropriation Bill.