Government is in a financial hole and it must stop digging

Since 2015, the question uppermost on many minds was whether the government was broke. It is a question on which the government has kept the lid and mouths firmly shut.

But it was given currency by the State’s huge and insatiable borrowing locally and overseas.

The government has maintained it is managing its debt well and that the borrowing is crucial for infrastructural development.

Still, it has increasingly come across as a tax-and-spend; borrow-and-spend; borrow-to-pay-debts; and borrow-again government.

DROUGHT

Government has always needed reminding, as they do at Westminster, that when you find yourself in a hole, stop digging.

If government is broke, will it stop digging? What will be the consequences of such action?

First, what did Finance Cabinet Secretary Henry Rotich say happened and is going to happen? That the government has run out of funds because the taxman has not delivered, thanks to an unusually long election cycle and drought.

Don’t miss the subtlety in that statement. Drought is natural, so the Treasury is saying you cannot blame government for natural disasters.

CULPRITS

True, but while natural calamities are beyond the control of humans, government bears responsibility for controlling their adverse effects on the citizenry.

Government holds that the extended election cycle and by extension the uncertainty wreaked on the country, are attributable to the opposition.

True, money loathes uncertainty and just as it took two to tango electorally; two should have ended it instantly via dialogue.

What are the next steps? For the umpteenth time, government has announced belt tightening.

It has not worked previously because it is restrained and not thoroughgoing; dances around the real money guzzling culprits and hits small fry.

REDUCTION

There is a big difference this time. County governments, which have been waiting for disbursements from the Treasury for the last four months, will bear the brunt of National Government’s imposed austerity.

Their Sh302 billion approved in June 2017 will be reduced to Sh248 billion.

Observe here that Turkana Governor Josephat Nanok, the chairman of the Council of Governors, barracked the Treasury for taking the decision to cut funding and imposing it unilaterally.

SIBLING RIVALRY

But the more important issue is that Kenyans must discuss seriously the future of devolution.

This is because as Members of the National Assembly and Senators met in Mombasa in their delayed post-election caucus last week, the latter, led by Majority Leader Aden Duale, questioned Senate’s role, especially in finances.

This clash was called “sibling rivalry” and “supremacy war” by the media.

No, this is a continuing fight over the existence of the Senate and devolution.

CENTRALISTS

It is a fight that should remind all and sundry that unchecked politicians will make laws to suit them rather than for posterity.

It was MPs sitting in Naivasha in 2010 who neutered the powerful Senate in the proposed constitution painstakingly thought out by the Committee of Experts, led by Nzamba Kitonga and Ekuro Aukot.

This marked a new phase in the age-old conflict between centralists and federalists.

The castration of the Senate was a triumph of the centralists, represented by Kanu at the outset of the conflict in the lead-up to independence, over the federalists, represented by the short-lived Kadu.

DEVOLUTION

The defenestration of the Senate was an anti-devolution genie built into the Constitution.

The architecturally weaker House, therefore, is in a fight for survival. But it cannot do that by fighting the National Assembly but by initiating legislation to protect and strengthen devolution.

Devolution is the star of the Constitution and it is the Senate that must make it such by discussing and playing the oversight role in its finances and by ensuring counties have viable and sustainable programmes for raising revenue.

BIG FOUR

The second casualty of the austerity will be President Kenyatta’s legacy. As I argued on February 4, with a debt of Sh4 trillion, government would still borrow more to finance the President’s Big Four agenda and, therefore, a runaway debt would become part of his legacy.

Now some of the legacy projects will have to be scaled down, delayed or shelved.

In a nutshell, government’s pennilessness will unleash chaos and misery in the counties.

But, more importantly, it should focus attention on government’s borrowing vis-a-vis fiscal prudence and the effects of this debt on the national economy and ordinary people.

So will government stop digging? It must.