The National Treasury yesterday admitted the government faces a serious cash crisis and cannot meet all its financial obligations.
Funding to key government projects has been affected as well as county governments whose budget the government plans to slash by between Sh15 billion and Sh17 billion.
“We need to discuss with you [senators] and governors that the figure which we put on the table is not feasible based on the challenges that I have explained,” Treasury CS Henry Rotich told the Senate committee on Finance and Budget.
Because of the massive cash crunch, government institutions have been asked to cut down wastage and improve efficiency in the use of money allocated to them.
“Every institution must tighten its belt. We have adopted a tighter fiscal framework to reduce expenditure. We have to cut expenditure across the board so that we can match with our revenue,” he said.
He blamed the financial austerity on the failure by the Kenya Revenue Authority to meet targets in projected revenue collection, and the prolonged electioneering period.
“We have discussed with the KRA how to catch up by tightening the tax net on the domestic and Customs revenue,” Rotich told the committee chaired by Mandera Senator Mohamed Maalim Mahamud.