The national government announced that it had suspended all its commitments to pay outstanding dues.
In an internal memo dated March 31, issued by the Controller of Budget (CoB) Margaret Nyakango, the National Treasury was instructed to only process payments for government employees.
"This is to inform you that the National Treasury and Planning has put on hold all commitments, payments, and claims as the country assesses the resource requirements for Covid-19 interventions," reads the internal memo in part.
The CoB highlighted the need to marshall funds to tackle the Coronavirus outbreak as the key reason behind the drastic move.
"As you are aware, Covid-19 has come with requirements not initially anticipated in the budgets. For that reason, after establishing the costs, our budgets will be reorganised through a supplementary budget," the memo further reads.
The latest move to stop all due payments owed to various entities such as lenders is set to hit suppliers that were relying on the payments to cushion themselves from the economic impact of the disease that has turned into a global pandemic.
County governments are also set to feel the full brunt of this measure as it comes after the Institute of Certified Public Accountants of Kenya (ICPAK) recommended that they revise their overall development and recurrent budgets downwards for the remaining period of the 2019/2020 financial year which ends in June.
ICPAK Chairperson Rose Mwaura, in her statement, also advised the National Treasury to defer payment of Ksh18.34 billion in outstanding bills due by counties and Ksh370 million owed by the various government ministries for a period of 3 months.
"The institute acknowledges that the cost of the proposed Covid-19 stimulus and incentive package will be steep. However, the cost of inaction might be more severe," reads an excerpt from her statement.
Covid-19's impact of the economy is set to be felt over the coming months, with the latest report published by Business Daily revealed that foreign investors withdrew Ksh11.2 billion from the Nairobi Securities Exchange (NSE) in the last 60 days.
These set of investors who constitute approximately 70% of daily trading at the NSE, turned into net seller within the months of February and March, mimicking a global trend characterised by dumping stocks and seeking security in fixed income assets, including government bonds.
On April 1, Health Cabinet Secretary Mutahi Kagwe, announced that 22 patients had tested positive with the deadly virus, bringing the total number of infected individuals within the country to 81.
