Treasury cuts non-essential govt spending

National Treasury Cabinet Secretary Henry Rotich has issued a circular to all government ministries and departments banning non-essential expenditure.

This is part of the government’s austerity measures as it struggles to curb a fiscal deficit.

Rotich said there were restrictions on foreign travel and the size of official delegations going abroad, which he said must be kept at an absolute minimum.

“All benchmarking and study tours for national and county government officials have been suspended with immediate effect,” said Rotich.

He was speaking when presiding over the opening of the 2016/2017 National Budget’s public sector hearings at the Kenya Institute of Curriculum Development in Nairobi.

The ministry has also scrapped the buying of flowers for state offices and printing of celebratory cards during festive holidays, among others.

Rotich has also directed ministries and departments to uphold a freeze on government recruitment.

The Cabinet Secretary also trimmed the economic growth forecast for 2015 to between 5.8 percent and 6 percent, citing tighter monetary policy and the potential impact of the El Nino weather phenomenon that has brought heavy rains.

Rotich said growth would be in the range of 5.8 to 6.0 percent. The government already downgraded its forecast to 6 percent in October from the 6.5 to 7 percent it originally predicted.

While still on track to outpace the 5.3 percent growth it recorded in 2014, Kenya’s economy has this year been buffeted by global and domestic factors. A strong dollar and worries about a hefty current account deficit have weighed on the shilling, prompting the central bank to hike interest rates.

Rotich told a briefing he was reviewing spending in fiscal 2015/2016, which ends in July, and that government borrowing could be lower than expected. He did not give figures.

The budget deficit for 2015/16 has been forecast at 8.7 percent of gross domestic product, higher than 2014/15 and a level that has worried economists who say Kenya should be reducing the gap as the economy recovers from a sluggish period.

Rotich said the spending review would be presented to lawmakers but did not say when.

“The measures will be reflected in the supplementary budget to be taken to parliament soon,” he said.