NAIROBI, Kenya, April 17 – The government is at risk of missing its 2024 growth targets due to gaps in the Sh4.1 trillion budget for the financial year starting in July.
According to the Institute of Public Finance (IPF), a lack of allocation for pending bills, a low development budget, and overlaps in government functions could deny the economy the much-needed recovery push.
James Muraguri, IPF Chief Executive Officer, stated that the national government should prioritize four key sectors, including education, law, health, and agriculture, in order to achieve its 5.5 percent economic growth target for the 2024–25 fiscal year.
“The current discrepancies on budget allocations, low budget absorption rates, pending bills headache and duplication of functions are impacting efforts by the government to achieve its fiscal consolidation strategies,” said Muraguri.
The institute also emphasized the need for clearance of Sh570 billion nationally and Sh165 billion in county pending bills, overwhelming government finances, amid the necessity for fiscal consolidation.
“IPF proposes the establishment of a central sinking fund that will provide a structured approach to gradually pay off the pending bills over the next five years,” the IPF CEO stated.
“Alternatively, Ministries, Departments and Agencies (MDAs) could be tasked with making targeted budget cuts to address their outstanding liabilities.”
IPF cited that limited borrowing space to finance the budget and huge resources for servicing the high debt burden have forced the government to slash its budget allocations for the General Economic and Commercial Affairs (GECA) sector by 22 percent, the Agriculture, Rural, and Urban Development (ARUD) sector by 10 percent, and the Education sector by 3 percent.
