Don’t borrow to fund the budget, use tax cash well



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The government’s expenditure for the 2019/20 financial year is expected to have a slight increase against depressed economic conditions, signalling continued reliance on loans to meet the shortfalls.

The Kenya Revenue Authority, which is relied upon to generate cash to drive the economy, has consistently failed to meet its tax collection targets in the past couple of years, a matter that is increasingly raising concerns about practicality of its targets and importantly, ability to net in all eligible ratepayers.

In the financial estimates tabled in Parliament on Tuesday, National Treasury Cabinet Secretary Henry Rotich proposes to spend Sh2.7 trillion, up from the current Sh2.7 trillion, with the bulk going to the Big Four Agenda — universal healthcare, food security, housing, and manufacturing, as well as sectors such as education and national security.

Other infrastructure projects like dams, roads and energy are equally billed to consume a considerable chunk of the cash.

But the greatest concern remains the government’s appetite for debt to meet its financial obligations.

At least, it will have to borrow more than Sh600 billion to plug the black hole and pile up the debts.

Notably, the Budget is heavy on recurrent expenses, estimated to consume some Sh1.7 trillion, itself a challenge because the focus is consumption rather than production.

The Budget estimates come at a time when the country is struggling with huge loans, whose viability and returns are in question.

Just last week, China declined to honour Kenya’s request for loans to extend the Standard Gauge Railway from Naivasha to Kisumu and Busia and complete a circuit that links to Uganda and other neighbouring countries.

Reason? The country is getting weighed down with debts that it may not pay and moreover, the project’s payback is increasingly proving untenable.

In recent years, the country has borrowed heavily to fund infrastructure projects, mainly roads, the railway and energy, which are levers for economic development.

However, some of the projects are not feasible and may not justify the investments.

A major challenge facing the country is prudence and frugality in the use of public resources.

Corruption and high-level wastage means the country losses hefty sums every year, denying citizens services.

It is recalled that sometimes in the past, President Uhuru Kenyatta and his deputy William Ruto undertook to push through drastic cash cutbacks, including pay cuts, to reduce public expenditures, but little was achieved. Heightened drive to rein in the corrupt seems to be losing momentum.

Collectively, these are the reasons why the population is angry — demanding ruthless action on the corrupt and the wasteful lot in the public sector.

Budgeting must go hand in hand with proper cash management.


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