A cash hitch has compelled the Treasury to announce further cuts in the allocation for development projects to plug a Sh161 billion Budget hole, a move that will hurt job creation and upgrade of infrastructure projects.
Treasury Secretary Ukur Yatani has told Parliament that last year’s Budget cuts for lavish travel, advertising and trainings, which the State said were examples of wasteful spending, had failed to yield enough savings to fix the Budget deficit.
This has left him with no option but to turn to cash allocated for development projects for the current year ending June. Development projects are a key driver of economic activities and new jobs.
Fiscal gaps have been accompanied by a consistent failure by the Kenya Revenue Authority (KRA) to meet the government’s lofty revenue collection targets in a soft economy.
“The National Government’s estimated net issues for FY 2019/20 of Sh1,416 billion... are not fully funded — the proposed budget contains a Sh161 billion gap, the bridging of which will require further expenditure cuts of a similar magnitude,” Mr Yatani says in the 2020 Budget Policy Statement, which forms the basis for the Budget for the year starting July 2020, that was tabled in the National Assembly. “The scope for these cuts exists only in the development budget and to a small extent in other ‘O&M’ (operation and maintenance).”
