The National Treasury needs a properly crafted strategy to deal with the current cash crunch. The economy is facing a meltdown but the government’s responses are timid and uncoordinated. What is required are robust and radical interventions. Painful decisions have to be made.
Last month, the National Treasury instituted cost-cutting measures that include moratorium on foreign travels, capital expenses, communication and use of government vehicles. Lately, State corporations are being asked to return unspent cash to the Treasury for reallocation.
But the problem is poor coordination within government. While the National Treasury calls for budget cuts, some ministries and departments are embarking on grand projects that cannot be justified.
Similarly, while some ministries and departments are denied funds and pushed to operate on shoe-string budgets, others splash cash on unnecessary expenses. Opulence and extravagance is daily exhibited on the roads. Cabinet secretaries, Speakers, governors and other top government officials travel in long convoys and live large when everyone else is tightening the belt. Presidential trips and expenditures are not controlled. There is no sense of urgency in dealing with the cash crisis.
The starting point is strict enforcement of the new measures. Among others, the Treasury should give regular updates on the sums of money saved through the cutbacks. Two, it has to audit all capital projects and assess whether they are necessary or a priority. Also, there is need to determine whether they are viable or not; are likely to give return on investment or they are mere populist projects to glorify leaders.
Three, the government has to tackle corruption, which has emerged as the single greatest threat to the survival of this country. Huge amounts of money are lost through corruption. For nearly a year, the government embarked on aggressive crackdown on corruption but the fire has died. Several high-level officials were arrested and charged in court with corruption but the cases have stalled. There is neither momentum nor morale to push through the crusade.
Four, the government requires a long-term strategy to grow the economy and that entails elaborate legal, policy and institutional structures that can attract investments. Acting Treasury Cabinet Secretary Ukur Yatani has his work cut out. He must do something drastic to save the economy from sliding into recession.