In a significant fiscal adjustment, the Kenyan government has reduced the national budget for this financial year by Sh132.46 billion, lowering it from Sh3.981 trillion to Sh3.848 trillion, a 3.3 per cent decrease.

The reduction follows the signing of the Supplementary Appropriation Bill 2024 and the Division of Revenue Bill 2024 into law by President William Ruto at the State House on Monday.

The Supplementary Appropriation Act 2024 introduces a reduction of Sh32.6 billion from various budget allocations.

It rationalises expenditures, authorising the release of Sh102 billion from the Consolidated Fund for the financial year ending June 30, 2024.

The reallocation prioritises economic performance and enhanced service delivery.

The education sector receives a boost with university education allocated Sh4.468 billion and secondary education Sh1.112 billion.

Meanwhile, development spending has been rechannelled to critical areas, reducing by Sh75.29 billion, while Sh51.12 billion has been earmarked for emerging needs.

Significant funds have been set aside for emergency interventions under Article 223 of the Constitution, which allows for the financing of urgent needs subject to subsequent parliamentary approval.

These include Sh4.3 billion to the State Department for Arid and Semi-Arid Areas and Regional Development for humanitarian aid to flood victims, Sh3 billion to the Department of Internal Security for El Nino disaster management, and Sh3 billion for the fertiliser subsidy programme. 

Additional allocations include Sh1 billion for the emergency rehabilitation of flood-damaged roads, Sh11.4 billion for the Kenya Revenue Authority (KRA) to enhance revenue collection (Sh4 billion) and settle pending bills (Sh7.4 billion), and Sh2 billion for the National Police Service's medical insurance.

President Ruto remarked that the funds will enable the government to support dairy farmers, promising prompt monthly payments and an increase in milk prices to Sh50 per litre.

Furthermore, the Division of Revenue Act 2024 raises county allocations by Sh14.69 billion, from Sh385.4 billion to Sh400.1 billion for the next fiscal year starting July 1.

"We have not only met the constitutional requirement of 15 per cent, but also increased it to 25 per cent," Ruto stated.

The new allocation is expected to enhance service delivery at the county level by ensuring sufficient funding for county governments as stipulated in the Fourth Schedule of the Constitution.

In addition, the law assigns Sh2.5 trillion to the National Government and implements Article 204 of the Constitution on the Equalisation Fund, allocating Sh7.8 billion, equivalent to 0.5 per cent of the last audited revenue accounts.