EDITORIAL: Raise project spending – Business Daily

The revelation that public projects spend hit a seven-year low over the six months to December should be a cause of concern because it points to a hurting economy.

Newly published data by the Treasury shows ministries, departments and agencies (MDAs) spent Sh112.80 billion on development in July-December 2019, representing 26.81 percent of the Sh420.77 billion full-year allocation.

Analysis further shows that the low absorption rate was only close to what was registered in the first half of the 2017/18 financial year at 26.81 percent of the Sh351.05 billion development budget for the year amid a heated presidential election contest. The statistics also indicates that the cash spent on capital projects between July and December last year was 3.54 percent less than Sh116.94 billion in the same period a year earlier.

This bad performance should get us worried because it is a sign of a distressed economy in need of urgent intervention to place things back on track.

Reduced spending on development projects such as infrastructure, water and real estate roads has a direct negative impact on the economy and the government must work to clear the cash flow challenges which have curtailed new investments and expansion plans by companies and hurt prospects of job creation as well as revenue collection.

Counties and state agencies with pending bills should clear them to release money back into the economy. Many suppliers of goods and services cannot operate optimally because huge portions of their capital is locked in long running pending bills.