Nairobi — Ministries, Departments, and Agencies(MDAs) are set to fully cut spending on foreign travel, purchase of motor vehicles, and training in the current budget as part of President William Ruto’s Sh300billion austerity plan.
The MDAs will also be required to fully cut spending on the remaining allocated funds for purchase of household furniture and institutional equipment, purchase of office furniture and general equipment, and refurbishment of buildings.
The Treasury in its revision of the estimates of expenditure and revenues for the financial year 2022/23 has also directed the MDAs to effect a 75 per cent cut in spending on domestic travel, communication services, advertising and printing, hospitality, and vehicle rentals.
Other areas to be affected by the 75 per cent cuts are contracted professional services, routine maintenance – vehicles and other transport equipment, fuel oil and lubricants, research, feasibility studies, project preparation and design among others.
According to Treasury CS Njuguna Ndung’u, financing challenges as well as emerging expenditure pressures have made the government see a need to realign and reprioritize spending within a sustainable fiscal framework.
“In this regard, the National Treasury is in the process of rationalizing expenditures and mobilizing revenues to achieve a deficit financing target of 5.7 per cent of the Gross Domestic Product (GDP),” Ndung’u said.
Further, the Treasury has proposed that all MDAs remove all new projects; rationalize projects with implementation challenges; review counterpart funds and scale down on externally funded projects with absorption between 60 to 65 per cent.
The revision of spending is being undertaken in accordance with Article 223 of the Constitution and Section 44 of the Public Finance Management Act (PFMA), 2012
Further, as part of the plan, accounting Officers will be required to critically review the expenditure requirements for up to December 31, 2022 and retain items likely to be spent before the approval of the Supplementary Estimates.
“Accounting Officers should ensure that only approved additional expenditures by the National Treasury are reflected in the Supplementary Estimates No. 1 for the FY2022/23. In doing so, they should provide supporting evidence for the approved additional expenditures,” said Ndung’u.
The officers are also required to review requirements for personnel emoluments and gratuity for the financial year and only reflect the actual requirements up to the end of June, 2023. Any excess provisions should be surrendered for salaries.
“Shortfalls in personnel emoluments and gratuity should be justified before any additional funds considered and provided. To facilitate this review, MDAs are required to submit all IPPDs/payrolls for the previous and current financial years to facilitate computation of the salary requirements.,” said Ndung’u.
Accounting officers are also required to ensure that pending bills and carryovers from the FY 2021/22 are prioritized and paid for within the budgetary provision of the current year.
Further, accounting officers were guided to ensure that no contracts and tenders are awarded for goods and services without sufficient budgetary provisions.
According to data from the National Treasury, spending across the 2022/23 financial year has been estimated at Sh3.358 trillion against revenues projected at Sh2.462 trillion.
This leaves behind a financing hole estimated at Sh862.9 billion.
Of the Sh3.4 trillion budget this financial year, Sh2.271 trillion is estimated to be recurrent expenditure which includes spending by ministries.