Robust strategy will cut spending – Rotich

January 15, 2014
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Rotich said business class flights for government officials will also be reduced while official meetings will also be restricted to government institutions/FILE
Rotich said business class flights for government officials will also be reduced while official meetings will also be restricted to government institutions/FILE
NAIROBI, Kenya, Jan 15 – The National Treasury is working on reducing spending in a bid to utilise more resources on development, job creation and strengthening of the private sector.

Speaking while launching the Medium Term Expenditure Framework’s public hearing, National Treasury Cabinet Secretary Henry Rotich said that foreign trips will be limited and the number of government officers travelling out of Kenya on official duty will be reduced.

Rotich said business class flights for government officials will also be reduced while official meetings will also be restricted to government institutions.

According to Rotich, plans are also underway to centralise government advertisements to be managed by one ministry.

“It’s becoming very difficult to manage every State agency’s spending. We want to have it centralised in order to have better control and management and achieve huge savings; the talks are ongoing,” he explained.

Plans are also underway to reduce the government wage bill from the current 50 percent of revenue to at least 35 percent.

“From July going forward the Salaries and Remuneration Commission has come up with a clear policy of reviewing wage increase in periods of four years. This will significantly reduce the wage bill,” he revealed.

The three-day public hearing which started on Wednesday will see sector working groups present their budget proposals for their 2014/2015 Expenditure Framework so as to receive feedback from the public and stakeholders and validate the sector budget proposals.

All working sector groups are expected to present their budget proposal to the National Treasury by January 24.

This comes as the government underperformed in its cumulative revenue collection that stood at Sh460 billion in the first six months of 2013/2014 financial year compared to its target of Sh489.6 billion – a shortfall of Sh28.6 billion.

According to the Treasury, the deficit was in respect of Sh10.4 billion in ordinary revenue (inclusive of railway levy) and Sh18.2 billon in Appropriations-In-Aid (A-I-A).

“The underperformance in ordinary revenue was mainly reflected in excise and income taxes while the shortfall in A-I-A, partly reflects underreporting by line ministries,” the Treasury reported.

Domestic financing as at end of December 2013 was below the target by Sh15.7 billion to stand at Sh67.4 billion compared to the target of Sh83.1 billion.

Expenditure execution has lagged behind in the first six months of the financial year on account of lower absorption of funds from external sources with recurrent expenditures above target by Sh25.3 billion.

Total expenditure (based on disbursement) amounted to Sh572.2 billion against a target of Sh685 billion – reflecting under-spending of Sh112.8 billion, of which Sh30.6 billion was in respect to lower than targeted disbursements to the counties, while Sh105 billion was in respect of development expenditure and net lending – domestically financed development expenditures were below target by Sh13.7billion, and those financed with foreign resources were below target by Sh90.3 billion.

“Even though performance in ordinary revenues indicate cumulative shortfall, the overall annual growth has been encouraging and we remain optimistic that the revenue target for FY 2013/14 will be met. We will continue to monitor closely revenue performance especially the VAT after the new law has taken full effect,” reported the Treasury.

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