State House, NIS among 18 agencies overspending taxpayer’s money despite austerity measures
Treasury data indicates that although overall recurrent spending dropped by 7.60 per cent to Sh746 billion compared to the previous year, some agencies continued to spend beyond their approved allocations.
Despite government directives to cut spending, at least 18 public entities, among them State House, Interior Ministry, National Intelligence Service (NIS) and National Police Service, exceeded their budgets by a total of Sh52.13 billion in the first six months of the financial year.
Treasury data indicates that although overall recurrent spending dropped by 7.60 per cent to Sh746 billion compared to the previous year, some agencies continued to spend beyond their approved allocations.
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The cumulative Sh61.35 billion drop in recurrent expenditure in the six months to December 2024 was the first such decline in four years.
This occurred at a time when President William Ruto's administration implemented strict spending controls following the collapse of planned tax increases due to widespread public protests.
The last time a similar decline was recorded was in December 2020, when Covid-19 restrictions led to office closures and remote work.
"To improve efficiency in public spending, the government will implement austerity measures aimed at reducing recurrent expenditure," Treasury said in the Budget Outlook and Review Paper for the financial year ending June 2025.
Non-essential expenditures
The cost-cutting measures targeted non-essential expenditures such as printing, advertising, travel, communication supplies and services, training, hospitality, furniture, refurbishment, vehicle purchases and research and feasibility studies for public offices.
Despite the overall reduction in government expenditure, 18 public entities defied budgetary limits. The State Department for Arid and Semi-Arid Lands (Asals) and Regional Development recorded the highest budget overrun, exceeding its target by 167.62 per cent. It withdrew Sh6.43 billion against a planned Sh2.40 billion, resulting in a variance of Sh4.41 billion.
The Ministry of Basic Education also overspent significantly, with recurrent expenditure reaching Sh83.44 billion—42.82 per cent above the estimated Sh58.42 billion. Similarly, the Interior and National Administration Department surpassed its half-year budget by 31.69 per cent to Sh18.32 billion, while the NIS exceeded its budget by 30.34 per cent, spending Sh30.21 billion.
The Immigration and Citizen Services Department recorded a 24 per cent overspend, reaching Sh6.12 billion. Meanwhile, State House, which has struggled to remain within its budget since President Ruto took office, withdrew Sh414 million more than planned, spending Sh2.81 billion—an increase of 17.26 per cent.
The law allows government offices to exceed their budget allocations under Article 223 of the Constitution, operationalised through Section 36(9) of the Public Finance Management (National Government) Regulations.
This provision permits spending up to 10 per cent beyond approved allocations without prior parliamentary approval. However, the Treasury must present a mini-budget to Parliament within two months of such withdrawals. The latest mini-budget was submitted last month and is pending debate and approval.
Regulations also prohibit MPs from approving a supplementary budget exceeding 10 per cent of the original estimates unless the excess spending addresses an unforeseen and unavoidable need.
Other government departments that exceeded their recurrent expenditure targets include Vocational and Technical Training (11.99 per cent over budget to Sh12.93 billion), Higher Education and Research (8.47 per cent over budget to Sh64.67 billion), and the National Police Service (4.52 per cent over budget to Sh55.16 billion).
The overspending occurred as government revenue collection underperformed, with the Kenya Revenue Authority (KRA) falling Sh93.25 billion short of the Sh1.25 trillion target. The tax agency collected Sh1.16 trillion in the six months to December 2024, a 6.3 per cent increase from the previous year’s Sh1.09 trillion.
However, key revenue streams performed below expectations, with value-added tax (VAT) missing its target by Sh36.5 billion, income tax by Sh28.6 billion, excise duty by Sh13.7 billion, and import duty by Sh6.1 billion.
The Treasury attributed the revenue shortfall to the withdrawal of the Finance Bill 2024, which created a budget hole of Sh344.3 billion, as well as the economic disruption caused by anti-government protests.
The Parliamentary Budget Office (PBO), which advises legislators on fiscal matters, has called on the Treasury to expand the tax base instead of introducing new taxes that burden existing taxpayers.
"Rather than relying on the introduction of new tax policies that are likely to create new tax burdens on Kenyans, the government may focus on improving tax administration through better enforcement of current tax policies, enhanced data analytics, and increased use of technology to simplify tax processes and improve tax compliance," the PBO said in its latest review of Kenya’s taxation strategy.
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