Kenya is on a frugal path and has announced many plans to put a tight leash on the government expenditure. Many in the country refers to the austerity measures as brutal cuts. The plan includes ban on government officials’ overseas trips and many other measures, in an effort to rein in the fiscal deficit. The government feels that many of the trips of the government officers can be trimmed with the use of modern means of communications. Only in unavoidable situations, should they take trips, particularly outside the country.
Kenya’s recently appointed Acting Finance Minister Ukur Yatani said all non-core expenditures are being reviewed and pruned drastically. The idea behind the expected measures are to save money from the non-core segments to be spent on core sectors without accumulating debts, particularly external debts. An indication to this effect was given in June while presenting the Budget for the year.
Yatani’s predecessor, Henry Rotich, was severely criticised for over spending and imposing additional tax measures on already squeezed taxpayers. In the last annual budget, the government has set a target to bring the fiscal deficit down to 5.6% of gross domestic product for the 2019-20 financial year (July-June), from 7.7% a year ago. in 2018-19. The Opposition has been blaming the government for jacking up the borrowing, which many predicted that the economy may slip to a debt trap, while the government has defended the borrowing since it was meant to fund the infrastructure. At the same time, people allege that corruption has been on the rise and there were a lot of pilferages and loopholes in the system. However, the Treasury expects the current account to fall to 4.5% of GDP from 5% in 2018, riding on the back of strong remittances, earnings from tourism and horticulture exports and cut in non-essential imports
