Cutbacks to save government Sh5b spending

December 14, 2011
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Finance PS Joseph Kinyua/ FILE
NAIROBI, Kenya, Dec 14 – The government hopes to make savings of between Sh4 billion and Sh5 billion from the austerity measures that it is currently undertaking.

Finance Permanent Secretary Joseph Kinyua said on Wednesday that they were implementing cuts on local and foreign travel as well as procurement of vehicles and office furniture.

“We are mainly focusing on recurrent expenditure especially that of consumption nature that we can to minimise such as the areas of telephony, vehicles and travel. These are the areas that will have to be shelved until the situation improves,” he said.

Before the 2011/2012 budget was read, the Treasury together with the Parliamentary Budget Committee had identified areas that the government could cut back on and realised at least Sh10.4 billion on savings. The current cut backs will bring this to Sh15b.

The government has had to review the implementation of the current budget due to the changed economic environment that has seen it struggle to meet its financial obligations.

The government has been grappling with many challenges ranging from drought, the war on the Somali militia, Al Shabaab as well as the rising inflation and a devaluating shilling that have put pressure on its expenditure.

“In trying to pursue prudent macroeconomic policies to ensure that we do not put pressure on the domestic economic and create even more inflationary pressure, it has necessitated us to re-look at the expenditure and cut out areas that are not productive,” explained the PS.

Although admitting that the country’s finances are strained, Kinyua was however categorical that they will not cut back on the development budget.

“We want to live within our means and we do not want to create additional inflationary pressures coming from the fiscal policy,” he stated.

The PS spoke after Finance Minister Uhuru Kenyatta led senior officials from Treasury in signing two cooperation agreements with the Slovak Republic.

Through the Development Cooperation Framework and the Agreement on Promotion and Reciprocal Protection of Investments, the two countries can build strong relations in trade and business investments.

Currently, although there are some Slovak investments in the social and humanitarian sectors in Kenya, those in trade are negligible.

“These two agreements are important instruments that will facilitate smooth cooperation for the mutual benefits of our two people. It is therefore our hope that in particular through the implementation of the Investment Protection Agreement, more trade and investments will be realised,” Kenyatta said.

Visiting Slovak Republic Minister for Foreign Affairs Mikulas Dzurinda expressed confidence that his government will also be able to support Kenya’s infrastructure development strategy through the concessional export credit.

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