National Treasury CS, Ukur Yattani has stated that austerity measures will continue beyond the current financial year.
Furthermore, Ukur Yattani, CS National Treasury, said that parastatals, ministries, and government agencies should live within their means. The departments will cut non-essential expenditure on travel, hiring of staff, and vehicle expenses.
In addition, austerity measures include a freeze on new development projects until the current projects are completed.
A World Bank report, Kenya Economic Update recommends the need for expenditure rationalization measures to support a return to fiscal consolidation path.
In this case, having a clear quantification of fiscal savings expected from these cuts (cutting travel expenses and reducing wastages) will go a long way in improving the credibility of the fiscal consoslidation pathway.
READ ALSO: Kenya to Refinance its Commercial Debt
Furthermore, the report says that in the short run the National Treasury should prioritize completion of ongoing investment/development projects and clearance of pending bills and arrears owed to suppliers.
According to Yattani, government will direct taxpayers funds to short term projects with high economic and social returns. Treasury has revised 2019 growth projections from 6 percent to 5.6 percent.
Yattani hopes national treasury will contain expenditure below 23 per cent of GDP with the fiscal consolidation policy expected to provide a balance between revenues and expenditures thus mantaining macroeconomic stability.
Moreover, in FY2020/21 Yattani expects budget deficit to fall to about 3.5 per cent of GDP.
RELATED
Amb. Yatani is Kenya’s 15th Finance Minister
