Treasury orders funds priority on flagship infrastructure projects

What you need to know:

  • State seeking faster completion of scores of capital projects
  • The plan to review unfinished projects comes as the government looks for large additional savings this year.
  • President Uhuru Kenyatta has indicated that his government is likely to prioritise projects with strong social welfare and business justifications

The Treasury has directed ministries and agencies to prioritise the completion of scores of multi-billion shilling infrastructure and development projects around the country before embarking on others.

Capital projects to be prioritised, says Treasury secretary Henry Rotich, are those that meet national objectives outlined in Kenya’s economic blue print, the Vision 2030.

This is an indicator that the Treasury could be initiating the long overdue fiscal consolidation plan which was delayed last year by the government’s need to spend heavily on projects ahead of the General Election, where the incumbent administration needed to show the electorate that it was delivering on promises made five years earlier.

“State corporations should ensure that adequate funding is provided to priority projects and aligned with emerging government priority areas,” says Mr Rotich in a circular to ministries and department heads.

“In preparing the capital budget, priority should be given to the funding of ongoing capital projects. In this regard State corporations are required to take into account all ongoing multiyear funding requirements of capital projects up to their completion before initiating new projects.”

Unfinished projects

The plan to review unfinished projects comes as the government looks for large additional savings this year.

Experts have cautioned the country to put in place serious fiscal consolidation measures to slow down the debt accumulation that has seen the debt to GDP ratio rise to 57 per cent from 54 per cent in June 2016 as per World Bank estimates.

The country has been undertaking massive infrastructure projects bankrolled using billions in foreign financing, partly because an ever-growing recurrent expenditure bill has taken up about 90 per cent of the country’s ordinary revenue.

President Uhuru Kenyatta has indicated that his government is likely to prioritise projects with strong social welfare and business justifications such as power and water generation, while less essential undertakings could be cut back.

His economic blueprint for the next five years has been pegged on four key sectors that include food security, affordable housing, manufacturing and affordable healthcare.

Fiscal deficit

The Treasury targets to reduce the fiscal deficit to six per cent of GDP, from a projected 8.3 per cent in the financial year 2017.

Mr Rotich told Parliament last year that the government would “reduce the fiscal deficit and ensure the continued sustainability of our debt”.

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