Government freezes jobs and cuts perks

The Kenya Government has frozen employment, suspended development projects and slashed perks in the face of a Sh100 billion hole in its finances.

“There shall be no more recruitment of personnel for the rest of this financial year even where the necessary authority has been obtained. All approved recruitments should be deferred to the next financial year,” says a Treasury circular sent to all accounting officers two weeks ago.

Only staff in a security capacity will be hired, and all projects are on hold until the next financial year. In a sign that the government is in financial trouble, the Treasury has also ordered cuts in spending on training, office and general supplies, purchase of furniture and other equipment.

Original budget

Expenses on board meetings, conferences, seminars, workshops, retreats, refurbishment of buildings and routine maintenance of assets have also been cut by 10 per cent of the original budget.

Foreign trips by ministers and parliamentary committees are to be scaled back to save money. Finance permanent secretary Joseph Kinyua has asked accounting officers of all departments to slash spending on transport, allowances, foreign and local travel by up to 15 per cent.

As a consequence of the freeze in employment, candidates who recently sat interviews in various ministries and departments and passed will have to wait until after the June budget to know when they will be employed.

Ministries of Agriculture, Trade, Housing, Immigration and Local Government, among others, which had recently either placed advertisements or interviewed recruits will have to wait until after June to employ.

Also likely to be affected is the Sh700 million that was meant to purchase the five-storey Shell and BP House for Prime Minister Raila Odinga.

The austerity measures are evidence that the government’s spending binge has run into a wall. The difficulties arise from expenditure forced on the government by drought and it has had to import food and fertilisers, which it had not budgeted for.

A lot of money has also been spent to resettle internally displaced people, who were kicked out of their farms in the post-election violence that in itself undermined food production.

The drop in economic growth from seven per cent to under three per cent also means that the government will collect a lot less in taxes than it had hoped. The size of government — 42 ministries — is also a drain on the Treasury.

The government started the financial year with a hole in its budget of some Sh127 billion and hasn’t been able to sell off parastatals such as National Bank of Kenya and Kenya Wine Agencies Ltd, the proceeds from which it hoped to use in plugging the hole in the budget.

Because of heavy import expenditure and a drop in exports, the foreign currency reserves have fallen to less than three months of import cover, down from four months. Reserves are a measure of a government’s ability to pay for imports and meet its debt obligations.

Signs that the government was in trouble emerged when salaries for civil servants and teachers were delayed for more than a week in the last few months.