Treasury data shows Sh73.56 billion was channelled to development projects in the period of elevated political tensions, representing a 38.04 per cent decline compared to Sh118.73 billion in similar period a year earlier.
The cut in development spending has affected project plans such as roads, water, power plants, real estate projects and electricity transmission.
The government remains the biggest buyer of goods and services and reduced spending hurts economic growth which has been downgraded to five per cent from initial forecast of 5.9 per cent.
Development spending in five months to November dropped by Sh45.17 billion compared to last financial year, further dimming economic growth and jobs creation.
Treasury data shows Sh73.56 billion was channelled to development projects in the period of elevated political tensions, representing a 38.04 per cent decline compared to Sh118.73 billion in similar period a year earlier.
That was the lowest project spending since financial year 2013-14 when Sh72.31 billion was spent when revenue is running behind targets. The Treasury said in September revenues were Sh29 billion short of target.
This also triggered austerity measures, including government officials no longer being allowed to travel outside the country without clearance from the President and domestic travel being reviewed.
The cut in development spending has affected project plans such as roads, water, power plants, real estate projects and electricity transmission.
The government remains the biggest buyer of goods and services and reduced spending hurts economic growth which has been downgraded to five per cent from initial forecast of 5.9 per cent.
“The big spenders in an economy are the government. They are spending, but they are not necessarily paying today because they have their own cash challenges,” Deloitte East Africa tax partner Nikhil Hira said in an interview on November 29.
“When we set Sh1.4 trillion as a (tax revenue) target, I was skeptical. I am even more skeptical because the economy is not doing as well as it might. It’s ticking over, but not ticking over very much. Cash circulation is still minimal in the economy.”
State spending puts money in private hands through demand for raw materials, which ultimately creates new jobs.
Cement makers, steel manufacturers, contractors and the thousands of workers employed in the infrastructure pipeline benefit from public spending and are likely to feel the pinch of the drop.
Output in Kenya’s private sector contracted for six straight months in October, according to a Stanbic Bank market index that tracks manufacturing and services, as new orders and employment contracted on poll jitters.
The Supreme Court nullified the August 8 ballot in which President Uhuru Kenyatta was re-elected, ordering a re-run held on October 26 that Mr Kenyatta also won.
Opposition leader Raila Odinga boycotted that poll, saying it would not be fair.
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Note: The results are not exact but very close to the actual.
