Poverty forces State to rethink spending plan 2009/10 budget economic growth

In the past 12 months, food prices have risen by an average of 30 per cent, meaning that to maintain the same portion of diet, Kenyans have had to scale up their food budget by a similar margin of 30 per cent every month.

Poverty bog

The hardest hit have been low-income earners and the lower end of the middle class who spend over 70 per cent of their income on food.

That means that the low income earners are sliding further into the poverty bog while those in the lower end of the middle class are now operating below the poverty line, meaning they are not able to afford not more than two meals a day.

This sorry state is well reflected by the fact that the cost of living in the lower income category of the Kenya population, as mirrored by monthly inflation rates, increased from 25 per cent in January 2009 to 31.9 per cent in February 2009.

This implies that every month, a third of the low income earners’ wealth is slashed off by high prices.

Comparatively, the upper middle class and the upper income groups experienced only a third of that pressure on their income with an inflation rate of 13.3 per cent.

In effect, the high food prices risk reversing gains made in reducing the country’s poverty incidence, which by 2007, had fallen from 56.8 per cent of the population to 46 per cent.

To address the food crisis and arrest the slide of the Kenyans back to abject poverty, the government will in the supplementary budget to be presented in Parliament later this month or in early April, be seeking authority from MPs to run a food subsidy programme in the country.

Too ambitious

Finance minister, Uhuru Kenyatta, will also be seeking to align state policies with market reality after it become clear to the government that policies laid out in the budget presented last June by the then Finance chief Amos Kimunya, are too ambitious to be carried out.

The two factors were some of the key highlights that the government presented to the International Monetary Fund (IMF) as it sought to borrow Sh80 billion to fund food imports and restock the foreign account balance at the Central Bank of Kenya.

“A revised monetary programme for 2008/09 will continue to aim to contain inflationary pressures while providing sufficient liquidity to support economic activity and rebuilding international reserves,” a statement released by IMF after its country visit read.