Treasury to Cut Local Borrowing by a Quarter

The National Treasury is expected to present a budget proposal but unlike other years where money was given out to ministries, in this proposal money will be taken away from ministries and agencies that have not yet spent money allocated to them.

According to the National Treasury, all the projects that had not broken ground as at December 2015 will be forced to give back the funds allocated to them as the government strives to minimize spending of unrealistic projects as much as possible.

The treasury is now planning to cut domestic borrowing for the financial year 2015/2016 by about a quarter. This is because the treasury has already set out plans to cut its expenditure by one percent of the GDP, a decision that will see local borrowing cum down to 168 billion shillings.

The supplementary budget that is already before the cabinet is yet to be approved. It will also have to be presented before the national assembly for approval. According to the Treasury Cabinet Secretary, the supplementary budget is set to reduce the budget deficit to under seven percent of the GDP from what it is at the moment of 8.7 percent.

This comes as Kenya Revenue Authority failed to hit its revenue collection target twice; first by 28 billion shillings and second by more than 46 billion shillings. Early last year the government came under pressure to explain what was termed as cash crisis that had hit most sectors with some quarters speculating that the government was broke.

Most economic analysts have praised the supplementary budget saying that it will minimize on wasteful spending and also maximize on productivity. As the government strives to minimize wasteful spending, however, corruption still remains a major challenge. Last year, President Uhuru Kenyatta declared corruption as a threat to national security as the vice became rampant in almost every sector. It is estimated that Kenya losses more than 500 billion shillings every year through corruption.

Article by Juma Fred.