Budget AnalysisInsightsKenyaMacroeconomic update

14 February 2023

Kenya: FY23 Supplementary Budget Poses Credibility Deficit

In brief

  • The National Treasury published the FY23 Supplementary Budget documents last week, which will be tabled in the National Assembly today (14 February, 2023).


  • Subsequently, the Budget & Appropriations Committee will table its recommendation report before a Supplementary Appropriations Bill is introduced and approved by the National Assembly


  • The FY23 Supplementary Budget was presented to the Cabinet at the end of January 2023, in line with the IMF programme’s structural benchmark


  • Although President Ruto had hinted at an ambitious KES 300.0bn slash in budget spending by the national government, the published documents show a modest KES 13.3bn reduction in spending by the national government


  • While there is still policy inertia around the unsustainable fuel subsidy, the government is weaning its extraordinary support to two SOEs; Kenya Power and Kenya Airways.


  • Although the undisbursed KES 29.6bn as equitable revenue to counties portends some legal challenges, we do not see the bicameral Parliament making a big fuss out of it.


  • The fiscal deficit target in the revised FY23 budget narrows from 6.2% to 5.7%, but we opine this is cosmetic based on an ambitious upward FY23 nominal GDP revision


  • We are likely to see investors piling up on duration as the presumed KES 300bn spending cut, hitherto government’s open mouth operations, has not materialized in the FY23 supplementary budget.