Githae faces uphill task at Finance

The government may have to refund an estimated Sh4 billion to taxpayers if the Finance Bill is not passed by June.

The biggest challenge facing the acting Finance minister Robinson Njeru Githae as he takes over running of the Treasury will be how to quickly mobilise Parliament to pass the Finance Bill for the current financial year.

Mr Uhuru Kenyatta, who stepped aside this week after being indicted by the International Criminal Court, left the scene before Parliament passed this critical piece of legislation.

For the first time in many years, the government finds itself in the middle of the financial year without a  Finance Act — the legal instrument that supports tax collections.

The Treasury may have to refund all taxes and duties collected after the expiry of  the Provisional Collection of Taxes and Duties Order, 2011, for the period January to June 2012.

Whether Mr Githae will deliver on the Finance Bill remains to be seen. (READ: A full plate awaits Githae)

A lawyer by profession, he does not rank high in the political pecking order within President Kibaki’s Party of National Unity.

Neither does he have the political stature  and mettle to mobilise bi-partisan support for the Finance Bill.

Achieving partisan support for the Bill will be an uphill task for Mr Githae, especially because the controversy over the Finance Bill revolves around the hugely populist issue of control of bank lending rates.

Through the Finance Bill, the MP for Gem, Mr Jakoyo Midiwo, is pushing for the introduction of minimum and maximum rates which  banks can charge to customers.

At the same time, the MP for Rangwe, Mr Martin Ogindo, has proposed major amendments to the formula which the Electricity Regulatory Commission applies in setting consumer prices of petroleum.

The difficult part is that the two MPs basically ambushed Mr Kenyatta by demanding to introduce these changes through the Finance Bill and at a time when it was at an advanced stage of being passed.

The amendment sprang up at the committee stage. Another major issue which Mr Githae will be expected to deliver on almost immediately is the $600 million (Sh51 billion) off-shore borrowing Mr Kenyatta has been planning to do.

As he left the Treasury, Mr Kenyatta was at an advanced stage of signing agreements with three big international commercial banks to arrange and advise on the huge borrowing.

The government is borrowing to substitute what it planned to borrow from the domestic market.