Development cash to be diverted to war on virus

The National Treasury has proposed a freeze on all development projects and the cash diverted towards the fight against coronavirus. Among the projects to be affected by the major budget cuts are those under President Uhuru Kenyatta’s Big Four Agenda.

The proposed re-allocation of resources is contained in a supplementary budget to be tabled in Parliament next week.

Government restrictions, including a ban on all international flights and a dusk to dawn curfew in ongoing efforts to contain the Covid-19, have hit all the major sectors of the economy hard. Businesses have shut down and thousands of employees send home.

This came as the Government yesterday confirmed 22 more cases, to bring the Kenyan tally to 81. Officials have predicted that Kenya could have up to 10,000 infections by the end of this month.

Viral disease

Authorities have warned that the worst may still be ahead of us as the viral disease continues to hold the world at a standstill. 

The Government is on a mission to mobilise resources to equip health facilities across the country, hire more health workers as well as offer social support to the vulnerable. 

Sources at the Treasury told The Standard the planned freeze will also affect travel allowances as the Government races against time to raise resources needed to combat the malady.

Billions of shillings that had been earmarked for projects, including roads and dams, will now be channeled towards battling coronavirus if the proposal goes through. 

“We are only paying for commitments already made. Anything else that has not been committed to will stop. Some of the areas to be affected are travel allowances. This is because we are not sure if this thing (coronavirus) will end soon,” said an official who did not wish to be named.

Last evening, meetings with various ministries were going on to discuss the proposal.

It was not possible to establish the exact amount the Government plans to raise from the freeze.

Treasury Principal Secretary Julius Muia declined to discuss the proposed budget cuts only saying; “We are discussing all proposals aimed at raising resources to deal with coronavirus. It is important that all options be explored. However, we cannot discuss the mini budget as it is yet to be approved by the Cabinet,” Dr Muia told The Standard on telephone. A supplementary budget re-allocates funds from non-essential projects to more urgent ones.

Uhuru Kenyatta has since set up an emergency fund to mobilise resources to mitigate the effects of the disease.

At the same time, the Government has suspended all payments to counties, except payment of salaries, until further notice. This is part of the measures to marshal resources to deal with the global pandemic that has since been termed in some quotas as the worlds’s worst crisis since World War II.

Controller of Budget (CoB) Margaret Nyakango, in an internal memo to her staff, said only salaries of the Government employees will be processed.

“This is to inform you the National Treasury and Planning has put on hold all commitments, payments and claims as the country assesses the resource requirements for Covid-19 interventions,” Dr Nyakango said in the memo dated March 31, 2020.

Revise downwards

The Institute of Certified Public Accountants of Kenya (ICPAK) had urged the national and county governments to revise, downwards, their overall development and recurrent budgets for the remaining three months of the current financial year to free up money to be used to combat Covid-19.

The surging number of coronavirus cases puts Kenya in a difficult situation over how it will raise resources since the pandemic has shaken the global economy. All countries have consequently announced travel restrictions that have seen major airlines grounded.

ICPAK chairperson Rose Mwaura has advised the Treasury to defer payment of Sh18.34 billion in pending bills due by the counties and Sh370 million owed by national government Ministries, Departments and Agencies (MDAs) for the remainder of this fiscal year.

“The institute acknowledges that the cost of the proposed Covid-19 stimulus and incentive package will be steep. However, the cost of inaction might be more severe,” said Ms Mwaura.

Some of the proposed measures are likely to have negative impact the county governments expected to ramp up their preparedness against the pandemic.

Yesterday, President Kenyatta chaired the first meeting the 10-member board, consisting of the country’s top CEOs, mandated to lead the COVID-19 Emergency Response Fund. The team is led by East African Breweries Managing Director Jane Karuku.

Work together

“Thank you for agreeing to work together throughout this time as we seek to find solutions on how to cushion the vulnerable in our country as well as deal with the future,” Uhuru said.

By June, the Government had planned to spend Sh436.4 billion on development, which included capital-generating activities such as building of roads, hospitals, dams, bridges, airports and so forth.

At least Sh220.4 billion of these funds had already been disbursed to various State corporations by end of February.

This means as much as Sh216 billion could be re-allocated as government shifts resources to the fight against COVID-19.

Development expenditure had already been subject of austerity measures after Uhuru froze all new development projects except those relating to the Big Four Agenda.

Under the Big Four Agenda, Uhuru planned to boost the manufacturing sector to create jobs. He also wants every Kenyan to access to quality and sufficient food as well as access quality healthcare. He also planned to build at least half a million affordable houses. Now, it seems much of this will be put on hold in the wake of the pandemic.

Only the health ministry, which had been allocated Sh43 billion for development, will receive development cash. By February, the ministry had received Sh12.5 billion from the National Treasury. 

[Additional report by Rawlings Otieno]