Treasury talks tough on fiscal consolidation

Acting Treasury CS Ukur Yatani during vetting by the National Assembly Committee on Appointment at County Hall, Nairobi. [Boniface Okendo/Standard]

The National Treasury has warned government ministries and county officials to brace for new austerity measures in a bid to cut over Sh700 billion in the fiscal deficit.

Acting Cabinet Secretary Ukur Yatani said yesterday Treasury would soon announce “brutal” spending cuts that must be adhered to by public institutions at both levels of government.

“The cuts will be brutal and will be sustained,” Yatani told a meeting to plan the Government’s next budget in Nairobi.

The measures, said the CS, include budget rationalisation on non-core expenditures, which include foreign and domestic travel, hospitality, training, communication supplies, printing and advertising. Others are the purchase of furniture, office and general supplies, use of government vehicles and size of government delegations to meetings outside the country.

The Government hopes to halve the fiscal deficit from the current 7.7 per cent of GDP to 3.5 per cent by 2022, a feat that would require more than Sh300 billion in spending cuts or additional taxes over the next 18 months.

“A careful scrutiny of individual ministries, departments and agencies budget execution will be undertaken while preparing expenditure estimates for the FY 2020/21 and the medium-term,” said Mr Yatani.

He said Treasury would also freeze budgetary allocations to new projects and instead priorities funds to stalled projects or those aligned to the Big Four agenda. This is not the first time Treasury is talking tough on introducing austerity measures. Suspended CS Henry Rotich made a similar pronouncement that did little to stem wasteful expenditure in both the county and central governments.

“The Government needs to tame its appetite for borrowing if we are to achieve the amount of fiscal consolidation being targeted..,” said National Assembly’s Budget and Appropriations Committee Chairman Kimani Ichungwa.