Treasury imposes hiring and cash limitations in expenditures

As part of a broad range of steps to combat the wastage of public funds during tight budget conditions, the Treasury has established monthly funding restrictions for government ministries, departments, and agencies (MDAs) and prohibited hiring new workers, promotions, and pay hike negotiations.
In a memo to MDA accounting officials, Prof. Ndung’u stated, “Cash planning and setting of cash limits are intended to ensure more predictable execution of the budget, and consequently delivery of services and public investments.”
Category one expenditures under the new disbursement plan will pay for statutory obligations, such as debt repayments, wages, cash transfers to the aged and other vulnerable populations, pensions, and county equitable share.
Major social, economic, accountability, governance, and security programs, including foundational services and investments, fall under the second category.
All other government-financed expenses not falling under categories one or two are included in the third expenditure group.
The fourth category of spending consists of outside-funded initiatives that are accounted for as revenue in the budget and for which money is delivered to the exchequer.
“To enable a structured disbursement of cash to MDAs, the National Treasury will provide monthly cash limits for each quarter based on projected available cash for category 1, 2 and 3 expenditures and, consequently, meet requests related to category 1 and 2 expenditures promptly and category 3 when cash is available in line with withdrawal requests,” Prof. Ndung’u said.
The Treasury regulations also apply to spending on personnel related to hiring, promotions to higher positions, or collective bargaining agreements with labor unions that have an impact on costs.
“Accounting officers should take note that recruitment of new staff, replacement, upgrading, or promotion of staff should only take place after MDAs have obtained written confirmation of the availability of funding from the National Treasury, as well as the necessary approvals from the relevant public service entities mandated to undertake recruitment,” the CS said.
“Before requesting the appropriate guidance from the Salaries and Remuneration Commission, all proposed collective bargaining agreements with trade unions representing public servants with financial implications must be forwarded to the National Treasury to confirm the availability of funds.” Added the CS.
The Treasury has outlawed agreements for the provision of goods and services without prior authorisation that are based on available cash in an effort to further streamline expenditure.
“By May 31, 2024, all commitments for the supply of goods and services must be fulfilled. No obligations shall be made without sufficient backing. Accounting officers are responsible for preventing unauthorized, irregular, or wasteful expenditures. Any public employee who engages in financial delinquency should face immediate corrective action as well as disciplinary punishment,” the CS advised.
Only payments for goods and services that have already been delivered or received will be processed through the Central Bank of Kenya.
“Accounting officers should be aware that CBK should only be paid out according to approved and collected net exchequer allocations in aid. Payments should only be made for products and services received or provided.” Prof. Ndung’u stated .
The suggestions of a multi-agency pending bills committee shall be followed for the treatment of historical pending bills and carryover internet banking commitments for 2022–2023.
The formation of a special committee to audit the more than Ksh537.2 billion in unpaid invoices was agreed by the Cabinet this week.
The committee would have a working deadline of up to a year to report its findings, it was decided during a Cabinet meeting on Tuesday that was presided over by President William Ruto.
According to Treasury figures, as of the end of March, the total amount of unpaid national government bills was Ksh537.2 billion, up 23.6% from Ksh434.5 billion during the same time last year.
The suggestions of a multi-agency pending bills committee shall be followed for the treatment of historical pending bills and carryover internet banking commitments for 2022–2023.
The formation of a special committee to audit the more than Ksh537.2 billion in unpaid invoices was agreed by the Cabinet this week.
The committee would have a working deadline of up to a year to report its findings, it was decided during a Cabinet meeting on Tuesday that was presided over by President William Ruto.
According to Treasury figures, as of the end of March, the total amount of unpaid national government bills was Ksh537.2 billion, up 23.6% from Ksh434.5 billion during the same time last year.
To finance its 2023–24 budget during a challenging economic climate, the government must do a difficult balancing act. The first budget of President William Ruto is Ksh3.68 trillion, 8.6% more than the Ksh3.39 trillion for the fiscal year 2022–23.
This leaves a projected deficit of Ksh720.1 billion, of which Ksh198.6 billion would be borrowed from abroad and Ksh521.5 billion would be obtained domestically.
The estimated revenue for 2023–2024 is Ksh2.89 trillion. Of this, Ksh2.57 trillion comes from regular sources such investment income, income tax, VAT, and levies.