Acting Treasury Cabinet Secretary Ukur Yatani. The government is freezing development projects for a fixed period due to cash crunch

A day after President Uhuru Kenyatta told off governors over their protests sparked by a stalemate over division of revenue between the national and county governments, the national government is set to cut down on development projects as an austerity measure to protect an economy saddled with a humongous public debt and a huge wage bill.

In a letter dated July 23, Head of Public Service Joseph Kinyua directed CEOs of parastals and heads of Semi Autonomous Government Agencies (SAGAs) to tighten the belt on spending even as the government struggles to strike a balance between numerous essential needs.

“The government is currently seized with the alignment of the Financial Year 2019/2020 Budget towards support of the Big Four Agenda,”In furtherance of the same, the cabinet has directed all state corporations and SAGAs are only allowed to spend an amount equivalent to one quarter of last year’s recurrent budget,”

According to Kinyua, this amount should support all priority expenses over the first quarter ending September 30, 2019.

“Further a moratorium is hereby issued placing in abeyance all capital expenditures until otherwise directed. During the moratorium period, no capital expenditure is to be undertaken unless the capital expenditure is an ongoing project and is specifically approved in writing by the National Treasury,” reads the directive.

During the period, the budgets of the state corporations and SAGAs will be reviewed and rationalised by a team to be appointed by the president.

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{Read: Ukur Yatani appointed Treasury CS in acting capacity}

This is comes in which immediate former Treasury Cabinet Secretary Henry Rotich and his Principal Secretary Kamau Thugge were arrested and charged with circumventing the law to facilitate the theft of Ksh19 billion in the Arror and Kimwarer dams scandal.

President Kenyatta has since replaced Rotich with Labour Cabinet Secretary Ukur Yatani in acting capacity and Thugge with immediate former Planning Principal Secretary Julius Muia.

{See also: Experts: What govt needs to do to resuscitate failing economy}

The government has in the past expressed its desire to implement austerity measures most notably after the implementation of the 16% on petroleum products last year following massive public uproar.

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Samuel Gitonga is a senior reporter at BUSINESS TODAY. Email: [email protected]

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