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 Then, a resolution will be passed that will see the Bill withdrawn in its entirety.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.

Operations under the Office of the PresidentKSh451 million
Operations under State HouseKSh500 million
Security operations under Internal SecurityKSh2 billion
Reduction in the budget for various RDAsKSh4.6 billion
Security operations and modernisation under Ministry of DefenceKSh7.75 billion
Foreign relations and diplomacyKSh1.85 billion
Ongoing TVETs and TTIs projectsKSh800 million
Funding for the Differentiated Unit Cost model in universitiesKSh2.1 billion
Higher Education Loans Board (HELB)KSh3.2 billion
University infrastructure projectsKSh3 billion
Infrastructure for primary and secondary schoolsKSh1.6 billion
School feeding programKSh1.8 billion
Kenya Revenue Authority (KRA)KSh4.7 billion
Kenya Airways (KQ)KSh4.7 billion
Civil Servants Insurance SchemeKSh1 billion
Equalisation Fund arrearsKSh1 billion
Pending BillsKSh5 billion
NGCDFKSh15 billion
Provision for Medical InternsKSh3.7 billion
Managed Equipment Service (MES) under state department for medical servicesKSh1 billion
Ongoing roads projectsKSh15.1 billion
Construction of marketsKSh2.1 billion
Various irrigation projectsKSh3.7 billion
Galana Kulalu irrigation projectKSh1 billion
Various projects under the water works development agenciesKSh11.6 billion
Land resettlementKSh1 billion
ICT AuthorityKSh6.7 billion
Sports AcademiesKSh1.8 billion
State department for energy, cancellation of the 50 million per constituency last mile connectivity and other interventionsKSh14.5 billion
Last mile connectivity and street lightingKSh7.27 billion
Deferment of the livestock restockingKSh1 billion
Fertiliser subsidy (farmers to pay more)KSh5 billion
Arrears to farmers under sugar reformsKSh1.7 billion
New KCC mop-up of milkKSh1 billion
Coffee cherry fundKSh1 billion
County Aggregation Industrial ParksKSh1.6 billion
Cash transfer programKSh5.5 billion
NGAAFrecurrent KSh900 billion (provision of sanitary towels) and development KSh600 million
Ethics and Anti-Corruption Commission (EACC)KSh200 million
Office of the Director of Public Prosecutions (ODPP)KSh195 million
Political parties fundKSh900 million
Tree plantingKSh1 billion
National Lands CommissionKSh90 million
Independent Electoral and Boundaries Commission (IEBC)KSh185 million
Commission on Revenue Allocation (CRA)KSh20.65 million
Public Service Internship programKSh1 billion
Salaries and Remuneration Commission (SRC)KSh23.6 million
Deferment in confirmation of interns to permanent & pensionable and hiring (JSS)KSh18.9 billion
National Police Service Commission (NPSC)KSh50 million
The Auditor GeneralKSh410 million
Office of Controller of Budget (COB)KSh37 million
Commission on Administrative JusticeKSh33 million
National Gender and Equality Commission (NGEC)KSh21.25 million
Independent Policing Oversight Authority (IPOA)KSh55 million
Judiciary recurrent budgetKSh2 billion
Parliament – domestic travel, foreign travel, reversal of office operations and salary increment for staff, Bunge Towers and CPST projectKSh3.15 billion
County Equitable ShareKSh5 billion