Mbadi: Government inherited Sh.925 billion deficit

John Mbadi, National Treasury and Economic Planning CS. (Elvis Ogina, Standard)

Treasury Cabinet Secretary John Mbadi has explained that the Kenya Kwanza administration inherited a budget deficit of Sh.925 billion, which has made it difficult to achieve its fiscal goals.

In an interview on KTN, Mbadi said the government was overambitious in attempting to quickly reduce the deficit. 

“When this government came into office, the fiscal space was so constrained,” he said, noting that the deficit was 7 per cent when the administration took office.

By the end of the 2022/2023 financial year, the deficit had been reduced to 6.7 per cent. 

The government aimed to bring it further down to 3.5 per cent by the end of the 2023/2024 financial year, which sparked public complaints of overtaxation.

“The government was too ambitious to move that percentage to 3.5, and that’s what brought disquiet as a result of what Kenyans perceived as overtaxation,” he added during the Wednesday, November 27 interview.

He also noted that the budgeting process had been flawed, with officials allocating funds that were unavailable. 

“The planning process has been faulty. How do we onboard projects to the budget? That is one of the things I am working on to make sure that we link planning to budgeting,” he explained.

Mbadi said the government is committed to addressing economic liquidity issues, which he noted have particularly affected the middle class. 

“Most of the middle class are employed Kenyans who are finding it hard because of tax levies and measures introduced in 2023 and 2024, reducing their purchasing power,” he added.