Thursday, June 13, 2013

Budget statement a tight balancing act

The first budget of the Jubilee administration unveiled on Thursday was clearly a delicate balancing act between moving to make good on some of President Kenyatta’s campaign promises while resisting the temptation to splurge.

Finance Secretary Henry Rotich was in the unenviable position of providing funding for a large shopping list of a very expensive campaign manifesto wish-list, while keeping an accountant’s eye on purse-strings that are not elastic.

To some extent, he succeeded in providing the funds for a large number of ongoing projects and infrastructure projects, education, health, social support, agriculture, job creation and others.

But there were also many areas that were left out or given a fraction of what they really require. It is obvious that in the coming days, weeks, and months, there will be a lot of lobbying by interest groups that feel they were shortchanged.

Parliament has become a key player in the budget-making process and will as much as, if not more than the National Treasury, be the focus of a wide array of lobbyists and special interests groups.

All will be pushing to have their specific needs accommodated as the budget statement and the accompanying pieces of legislation go through the various processes before passage.

It is, therefore important that both be insulated from extraneous pressure, especially in an environment where MPs may be tempted to play politics with the budget or to open themselves up to blandishment from powerful lobbies.

It is also evident that there will be debate for some time to come on the measures proposed by the Cabinet Secretary to finance the budget.

Essential consumer items

A key debate will be on the VAT Bill and other tax measures that will substantially raise retail prices for a large number of essential consumer items and foodstuffs, hitting hard the pockets of ordinary Kenyans for whom the price of a packet of maize meal, a loaf of bread, or a bottle of milk is essential.

It is yet to become clear exactly how tax measures will affect Kenyans because Mr Rotich was rather economical on full disclosure on the exact proposals he will be presenting to Parliament.

The jury, therefore, is still out on whether the first budget of the Jubilee administration meets the most basic test of satisfying expectations while demonstrating fiscal responsibility.

It important that all the tax measures, borrowing and other proposals to fund the record expenditure be made public as soon as possible so that all in Kenya – whether ordinary wananchi worried about their daily meal, or giant corporations considering their capital investment options – have a clear picture of exactly how the budget affects them.

Meanwhile, it is only fair for all, both citizens and the government, to accept that if the economy is to get back on the desired growth path, there must be sacrifices.

But it is pointless to ask citizens to tighten their belts while the government splurges on those in leadership. Those in the Executive and the Legislature must lead by example and exercise frugality in the allotment of their own entitlements.

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