Ruto’s projects spending plunges to eight-year low
President William Ruto makes his address during the graduation ceremony of 10,521 NYS recruits at their Gilgil training camp on December 8, 2023.
What you need to know:
- Data shows State ministries, departments, and agencies spent Sh39.48 billion on projects in key sectors in the four months through October.
- This is the lowest spending on development projects in the review period since a similar period in the financial year 2015-16.
Expenditure on development projects for the first four months of the current financial year has plunged to an eight-year low amid a biting cash crunch, which has prompted the Treasury to re-channel its budget to priority areas.
Analysis of the latest expenditure from the government’s main account shows development projects have been hardest hit by the reallocation of cash, a move likely to slow down creation of job opportunities for millions of unemployed skilled and semi-skilled youth.
The data shows State ministries, departments, and agencies (MDAs) spent Sh39.48 billion on projects in key sectors such as energy, roads, construction, and water services in the four months through October.
This is the lowest spending on development projects in the review period since a similar period in the financial year 2015-16 when the country endured a liquidity crisis that saw the collapse of three banks.
Revenue collections
At the time, Sh39.01 billion was spent on projects, according to the data published by the Treasury.
Treasury secretary Njuguna Ndung’u reiterated Wednesday that the country was facing a short-term liquidity crisis on the back of unbudgeted cash demands due to emergencies arising from El Niño-induced mass flooding on top of famine earlier in the year amidst shortfalls in revenue collections.
“In one year, Kenya has gone into two extremes: severe drought, and now there’s El Niño. In both cases, we have reallocated recurrent budget and even development budget to save lives,” Prof Ndung’u told lawmakers.
The legislators had summoned the Treasury boss a day after they sittings were interrrupted over the delay in releasing National Government Constituency Development Fund (NG-CDF) and National Government Affirmative Action Fund (NGAAF).
Development projects
“At the same time, because both extremes also create recession [drop in economic activities], we are not getting adequate tax revenues. So in a sense, we are struggling,” Prof Ndung’u added.
The data shows the expenditure on development projects, which excludes the portion from development partners, dropped by nearly half (48.95 per cent) compared with a similar period last year when Sh77.84 billion was spent amidst the transition from the predecessor regime of Uhuru Kenyatta.
Economists reckon reduced spending on development projects such as roads, water, power plants, housing, and electricity transmission lines slows down economic activities, hurting the creation of new job opportunities and government revenue, largely taxes.
Cement makers, steel manufacturers, contractors, and the thousands of workers employed in the infrastructure pipeline benefit from public spending and usually feel the pinch of a drop in public expenditure on development.
