Development Projects Face Budget Cuts on the Latest Austerity Measures By the Government

The government has sacrificed allocation to development projects in the face of counter productive growth in recurrent expenditure and disappointing revenues.

Data from the National Treasury places the allocation on Capital projects at Ksh 250 billion against a target of Ksh 348.2 billion in the first six months of the 2019/2020 fiscal year to December 31, 2019.

In comparison to year-on-year, the trim to development expenditure represents a 19.8% drop from the Ksh 311.9 billion appropriation to projects in the first half of the 2018/19 financial year. On the contrary recurrent expenditure has increased, growing by 20% in the review period to Ksh 772.5 billion from Ksh 643.8 billion in spite of the insistent on cuts to the routine spend by the Treasury.

Operations and maintenance bills have carried the weight of responsibility having grown by 34.2% to Ksh 249.8 billion ahead of debt financing costs and beyond the guidance of Ksh 223.4 billion. ICEA Lion Head of Research Judd Mungi reckons development expenditure makes for a soft target in the government’s contentment of overzealous spending.

“The government has taken some initiative to cut recurrent expenditures. The key concern however is,as fiscal pressure mounts,the low hanging fruits tend to be development expenditure which may have to be sacrificed to an extent,” he said. The World Bank has previously raised concerns on routine cuts to the funding of projects, warning of core consequences including the expansion of economic inequalities among Kenyan social classes.