No Unbudgeted Spending: Government Imposes Tough New Measures to Curb Overspending

Government Imposes Strict Spending Controls Under Treasury Circular 10 of 2025

The Government has introduced sweeping austerity measures through Treasury Circular Number 10 of 2025, directing all Ministries, Departments and Agencies (MDAs) to operate strictly within the 2025 Approved Budget.

Any unbudgeted expenditure will now be considered void, with penalties for non-compliance.

According to Treasury, years of unplanned spending have undermined budget credibility and widened the fiscal deficit. The new directive is aimed at restoring discipline in public finance management.

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Contracts and Payments Under Tight Scrutiny

One of the most significant measures is the restriction on contracts. Any contract worth US$2 million or more will require prior written approval from Treasury. Contracts below that threshold must remain within the current year’s budget allocation.

Government has warned that any contract signed outside these rules will not be honoured, with suppliers advised to ensure compliance before entering agreements. In line with the measures, no payments will be made for unbudgeted expenditures.

Workshops, Travel and Vehicle Use Curtailed

Workshops and conferences have been suspended for the remainder of 2025, except for statutory or strategic meetings. Where training is necessary, MDAs must use government facilities such as ZIPAM and PSC Academies and hold events close to participants to reduce transport and accommodation costs.

Foreign travel has also been restricted, with government-funded trips suspended unless financed by external agencies. Special per diem rates have been abolished, with only standard Treasury or Public Service Commission rates applicable.

In addition, hiring of vehicles has been banned for MDAs reliant on the Consolidated Revenue Fund. Pool vehicles must now be logged and audited every two weeks, and government drivers are prohibited from taking vehicles home after hours, weekends, or public holidays.

Recruitment and Salaries Centralised

The circular introduces a general recruitment freeze across the public sector, with exceptions only for critical areas such as health, education, and security. Even in those sectors, hiring is limited to positions already budgeted for.

To tighten control over the wage bill, all institutions funded from the Consolidated Revenue Fund must migrate to the Salary Service Bureau payroll system immediately. Treasury says this move will enhance transparency and reduce leakages.

Capital Projects and Fuel Allocations Affected

Fuel allocations to all government institutions have been cut by 25%, with ministries receiving revised limits in an annexure to the circular.

On capital expenditure, only three categories of projects will receive funding: high-impact projects driving growth or reducing risks to life, projects requiring protective works, and ongoing projects with existing payment commitments. Procurement of new vehicles, furniture, and equipment has been deferred until 2026 unless already approved.

Austerity to Restore Budget Credibility

Treasury insists the measures are necessary to contain expenditures and rebuild trust in the national budget. By enforcing fiscal discipline, the government aims to reduce the accumulation of arrears and strengthen economic stability.

Here is the statement in its entirety;