Nairobi — The government has halted contract renewals and recruitment in State Corporations as it moves to implement major reforms, including mergers and dissolutions of several parastatals.

In a directive issued by Chief of Staff and Head of Public Service Felix Koskei, institutions undergoing restructuring have been ordered to suspend personnel changes, with the moratorium affecting executives and employees on contract terms.

"A moratorium is issued on recruitment and renewal of contracts for Chief Executive Officers or any other officers serving on contract terms, at the lapse of their current tenure," said Koskei in a circular to Principal Secretaries and other State officials.

"Any ongoing recruitment processes of staff in any cadre is halted forthwith."

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The move follows Cabinet approval of a reform proposal by the National Treasury targeting efficiency and cost-cutting in the public sector.

Affected institutions include 42 parastatals earmarked for merger into 20 entities, 25 set for dissolution, and six others expected to undergo restructuring.

Koskei further directed a freeze on approvals or implementation of human resource policies, salary reviews, staff reorganizations, and new capital projects.

Among the parastatals set for dissolution are the Numerical Machining Complex, Kenya National Assurance Company, and Kerio Valley Development Authority.

Proposed mergers include the integration of the University Fund with the Higher Education Loans Board, the Kenya Tourism Board with the Tourism Research Institute, and the Anti-Counterfeit Authority with the Kenya Industrial Property Institute.

The reforms are part of a broader plan to streamline operations in the public sector and reduce duplication of functions among State agencies.