Bring public spending under tighter control

There is disquiet in some quarters that the cash crunch in government could point an economy in trouble following reports that the Treasury has been unable to meet some of its financial obligations and is facing a debt crisis.

Treasury has delayed disbursing money to counties, the Higher Education Loans Board and several State corporations, stoking fears that the State is running on empty. Of greater concern though is that Treasury has asked counties to use overdrafts from commercial banks to pay staff and service their day-to-day operations, raising the prospects that interest rates could further rise and shrink the appetite of businesses to borrow from banks.