Top Stories / National
Friday, 10 Jun 2016 08:16 EATtmatalanga@kenyafreepress.com
Even to a layman in economics, Kenya’s national budget making process seems to have run completely amok. Budget figures are not correlated to national priorities while the country continues to accrue debt to potentially dangerous levels. Can’t our officials learn from the experience of Greece?
In yesterday’s budget, cabinet secretary for finance Henry Rotich just added a greater burden to the Kenyan taxpayer by declaring the government’s plans to source more loans from external lenders. It is even more surprising that the just concluded financial year 2015/16 was run on a huge deficit even after loans from China and other lenders.
The CS announced new taxes that he said would aid the government in collecting the much needed revenue to fund the 2016/17 budget. For example, starting July all cosmetic products will be taxed at ten per cent excise duty.
Even with the new taxes, what is clear to many Kenyans is that the total sum of taxes collected from their proceeds is still a long way short of the required amount stated by the CS. The latest revenue collections from the KRA shows that the taxman was able to raise about KSh888 billion against a target of KSh1.2 trillion by the end of April.
In order to meet its target, the taxman will be required to raise KSh327 billion in tax revenue by the end of June which by the look of things is impossible. With the budget for the year 2016/17 approximated at KSh2.27 trillion, Kenya will have no other viable option but to borrow up to KSh689 billion in the new financial year.
The current government has borrowed more in three years than what the previous regime borrowed in the last five years. Rotich was unable to keep the government in check with regard to expenditure ceilings. The government overshot the budget ceiling by KSh139 billion.
Some expenditures also don’t make much sense. For example, the CS gave the Ethics and Anti-Corruption Commission KSh2.8 billion to boost its operations in fighting corruption. This was ironical since the commission has never brought to book those involved in scandals such as the Chickengate, NYS, and Eurobond saga among other scandals exposed in recent months. To add salt to injury the CS awarded Mumias Sugar Co. KSh2 billion for its reestablishment yet the KSh1 billion given to the company less than a year ago has never been well accounted for.
It is such profligate, zero impact spending that has led the country into even more debt. Widespread corruption across all government sectors makes it hard for even well targeted expenditure lines to make a difference in people’s lives.
Kenya is bound to end up suffering from international trading and economic crises if the debt is not checked. The country has always boasted of being the economic powerhouse of East Africa. But with the other members of the East Africa Community already isolating Kenya; the truth is as clear as it can be: Kenya is on the way to its downfall economically.
The other day Uganda cancelled a deal with Kenya over the construction of oil pipeline through Kenya. It instead opted to construct its pipeline through Tanzania saying that the latter was less expensive. Now Rwanda has similarly pulled out from the standard gauge railway connecting through Kenya for the same reason as Uganda.
Decisions by both Rwanda and Uganda to pull out of deals over development projects signed by Kenya may be a warning sign to Kenya. They could simply have noticed that our lack of transparency and accountability will hamper investment in the short run. In the meantime, our country continues to incur debts that don’t contribute to economic progress for the people!
Matalanga is a student of journalism at the East Africa School of Media Studies and an intern writer at the Kenya Free Press.