Ndungu’s plan seeks to balance debt, steer recovery
Kenya’s 2024/25 budget, which is projected at Kes3.99 trillion, aims to address the nation’s spiraling debt while fostering economic recovery.
Treasury CS Prof. Njuguna Ndung’u unveiled the budget on Thursday, forecasting a fiscal deficit of 3.3 percent of the GDP, a marked improvement from the revised 5.7 percent of the fiscal year ending June 30th.
According to Prof. Ndung’u, “Kenya’s economy is unwinding from layers of negative and persistent shocks.” He noted that policymakers have set plans to lower the cost of living and stimulate the economy.
At the moment, the primary sectors powering Kenya’s economy include agriculture, manufacturing, transport and storage, financial and insurance services, and real estate.
The 2024/25 spending plan set out several policies to support and strengthen the country’s fragile economic growth. “We want to make sure that we revive the economy so that it can generate jobs for the youth,” Prof. Ndung’u noted.
This recovery is crucial for managing the country’s debt, which stands at an estimated 68 percent of GDP for the 2023/24 fiscal year.
To manage the country’s debt pile, Kenya plans to slow the uptake of new external commercial debt while also deploying innovative strategies such as debt swaps and diversifying financing sources through issuing Panda, Samurai, and Sukuk bonds in China, Japan, and Gulf countries.
Additionally, scaling up Public-Private Partnerships for commercially viable projects remains a priority, with 37 projects currently in various stages of the PPP project cycle, Prof. Ndung’u explained.
Read also: Parastatals to feel the pinch with 30% budget cuts
Public Finance Management Reforms
A big shift in Kenya’s public finance management in FY2024/25 will be the transition from cash basis to accrual accounting, which is set to begin on July 1, 2024.
“This marks a significant milestone in our journey to strengthen public finance management,” Prof. Ndung’u stated.
The shift to accrual accounting will allow the government to account for all assets and liabilities, including pending bills, public debt, and pension liabilities. Prof. Ndung’u noted that FY2023/24 marks the last time financial statements are prepared on a cash basis by both national and county governments.
The 2024/25 spending plan is also designed to enhance vibrancy and ensure sustainable growth. “We want to make sure that we revive the economy so that it can generate jobs for the youth,” he said, adding that the focus will be on creating a conducive environment for investment and growth across industries.
See below for an outlay of FY2024/25 spending plan:
