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MPs say Kenya living beyond means

Tuesday June 15 2010

National Assembly Deputy Speaker Farah  Maalim (right) confers with  the country director, Suny -Kenya, Fred Matiangi during a MPs Breakfast Budget 2010/11 briefing  June 15,2010. Photo/WILLIAM OERI

National Assembly Deputy Speaker Farah Maalim (right) confers with the country director, Suny -Kenya, Fred Matiangi during a MPs Breakfast Budget 2010/11 briefing June 15,2010. Photo/WILLIAM OERI 

By ALPHONCE SHIUNDU

As Parliament debates the 2010-2011 national budget Tuesday afternoon, MPs are agreed that Kenya is living well beyond its means.

The stark disclosure was made Tuesday morning at Nairobi’s Intercontinental Hotel at a meeting between the crucial House Budget Committee and lawmakers.

The committee chairman, Mr Elias Mbau (Maragua, PNU) and his counterpart at the Finance Committee Mr Chris Okemo (Nambale, ODM) said that inasmuch as the Sh998 billion budget “looks like a big amount”, the bulk of the money may not add new impetus to the country’s growth, given that the government is preoccupied with servicing debt.

The country’s total debt is pegged at Sh1.19 trillion, meaning that, each of the 40 million Kenyans owes creditors, both foreign and domestic, a total of  Sh29,750.

Mr Mbau said the Budget read last Thursday by Finance minister Uhuru Kenyatta was “not too bad” but insisted that “the debt must be kept in check".

Too ambitious

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Mr Okemo, a former Finance minister, also poured cold water on Mr Kenyatta’s 5.1 per cent economic projection, terming it as too ambitious.

He said that if the government fails to hit the target, then there’d be an impact on the revenues collected and so some of the projects envisaged in the budget may not even be met.

“The easiest route [in case of such an eventuality] will be to go for domestic borrowing, and that means we’ll not only crowd out local investors, but will be increasing the domestic debt,” said Mr Okemo.

The Deputy Speaker Farah Maalim was also irritated with the debt levels and asked the MPs to tighten the noose on the Executive when they begin the scrutiny of the Budget this week.

Even as MPs dismissed the budget for being ambitious, the mandarins in the newly created Parliamentary Budget Office also joined the fray: “The verdict is that it is an ambitious budget, very difficult to live with.”

Ms Phyllis Makau and Mr Martin Masinde all from the House Budget Office said it was “very worrying” that the country’s debt was going up when Parliament, through the recently adopted Budget Policy Statement, had asked the Treasury not to increase the public debt.

Specific measures

The worry too is about the debt crisis in the Eurozone, one of Kenya’s export hub. Mr Danson Mungatana (Garsen, Narc-Kenya) and Ms Amina Mohammed (nominated, Kanu) asked how the Treasury hoped to hit the 5.1 per cent growth, yet the economies of the major markets kept on shrinking.

Mr Masinde, an economist, noted that unless the minister had specific measures targeting the regional export market, it would be difficult to grow the economy.

“There’s no way revenues can grow more than the Gross Domestic Product, unless there are specific tax administration measures (to foster that), but this budget doesn’t have much.”

The mandarins also questioned the Treasury’s wisdom of going beyond Parliament’s cap on the budget deficit of Sh192.2 billion. They said the deficit had not only increased by Sh36 billion to Sh228.4 billion, but that also the amount to be borrowed locally had also risen to Sh102.7 billion from Sh95.3 billion.

The Treasury has a huge task of explaining to the lawmakers why it had to neglect their resolution, and woe unto the Treasury barons if they insist that it is the reality of government that prevailed over the idealism of the opposition.

Tueday’s meeting was meant to inform MPs on the impact of the budget on the country’s development.

Up to 35 MPs including minister Fred Gumo (Regional Development Authorities) and assistant minister Asman Kamama (Higher Education) attended the meeting.