Kibaki rules out suspension of projects

By Alex Ndegwa

President Kibaki has said development projects will proceed, contrary to Treasury’s earlier decision to suspend spending on infrastructure projects.

The President said the successful turnaround of crucial sectors of the economy, whose growth is predicted at 2.1 per cent this year down from 7 per cent in 2007, would depend on infrastructural expansion.

The Cabinet, he said, is working to oversee implementation of the projects. He cited Sh3.6 billion set aside to begin dredging works in preparation for the new port of Lamu.

The Government will raise money to finance the projects from tax revenue, development assistance and infrastructure bonds.

Revitalise economy

The Head of State spoke at Kenyatta International Conference Centre, Nairobi, where he addressed the 16th session of the National Economic and Social Council.

President Kibaki is received by members of the National Economic and Social Council at the KICC, Nairobi, Saturday. [PHOTO: COLLINS KWEYU/STANDARD]

The President’s directive appeared to overturn communication by Finance Minister Uhuru Kenyatta earlier this month that the Government would not spend on any new development projects, until its new financial year starts on July 1.

Treasury had announced a raft of belt-tightening measures that also included freezing employment and slashing perks in the face of a Sh25 billion hole in its finances.

Early this month, Uhuru said the Government had frozen employment, suspended development projects and slashed perks in the face of the budget deficit.

"There shall be no more recruitment of personnel for the rest of this financial year even where the necessary authority has been obtained," read a Treasury circular.

Yesterday, Kibaki signalled the Government would not sacrifice development spending despite the economic slowdown. He directed the city council to set up technical teams to ensure successful delivery of infrastructural projects.

He said the Government had opted to transform the Export Processing Zones into Special Economic Zones (SEZ) that would be developed in key towns throughout the country.

The zones will host world-class ICT, industrial, science and technology parks as a new means to revitalise the economy and create employment.

The Government would set aside land to invest on these zones, which would be supplied with infrastructure such as roads, electricity and fibre optic cables.

More jobs

The Athi River Basin Industrial Corridor had been identified as the first of the SEZ.

Kibaki added more than 20,000 jobs would be created in the next three years.

He also assured the country is secure from the global financial crisis.

"We do not have a local banking or financial crisis," he said. "Banks should continue lending to productive sectors so that we do not create a crisis where there is none."