By Jamesa Wafula in Nairobi.
K enya Treasury and National Planning Cabinet Secretary Prof. Njuguna Ndungu presented his first budget in parliament June 15, 2023 alongside other EAC members Uganda, Tanzania and Rwanda, with a harsh reminder of the soaring public wage bill at Kshs 9.6 trillion saying the state had to freeze any new employment in the public sector.
The Minister who spoke amidst a boycott by opposition MPs who have criticised the budget as only increasing the burden of cost of living to the ordinary Kenyan through fresh taxes, laboured through acres of tabulations granting huge allocations to different sectors some of which were dismissed as “white elephants” and conduits for high level graft. .
Budget watchers have questioned the billions allocated to research and technology as “white elephants” that take years before publishing any new finding worth writing home about and are asking the government to freeze such funding.
Professor Ndungu outlined new measures the government intends to take to bridge a huge budget deficit of almost Kshs 3.3 trillion with the tax body KRA only able to raise Kshs 896 billion. This leaves a yawning gap of more than Kshs 2 trillion which the government of President William Ruto says must be raised locally through expanding the tax bracket and mopping up public wastage, and abolishing some government recurrent costs like air travel and mileage to MPs and MCA’s. This many say is unlikely to happen and the government could resort to borrowing to even pay salaries.
Even as the minister laboured to explain that most taxes in the agriculture and manufacturing sectors had been brought down to boost production, it was not lost on many that the country faces a staggering external debt of Kshs 9.6 trillion part of which must be serviced next month with interest or else Kenya be regarded by donors as “high risk” debtor!
Former Prime Minister and opposition leader Raila Odinga has roundly dismissed the budgetary proposals as nothing but a recipe for economic recession that could escalate cost of living to astronomical levels saying the government is yet to convince multi-lateral lenders how it would offset the staggering external debt all due before July 30 2023.
President Ruto who has been in power for 8 months has not made any overt gestures to multi-lateral lenders over re-scheduling the external debts despite virtually holding meetings with several leaders of the G7 economic giants.
The controversial house levy that had drawn wide spread protests was scaled down while the governments pet project “Hustler Fund” was handed a princely Kshs 10.8 billion. With the counties getting KSHS 365 billion, the central government Kshs 1.4 trillion, and Kshs 718billion for development, President Ruto’s first budget has the country’s highest GDP deficit ever at Kshs 3.3 trillion!
Despite his promise to cut down on external borrowing on coming to office September 15 2022, President Ruto’ has infact over borrowed more than his predecessor retired President Uhuru Kenyatta.
By doubling the fuel levy and slapping heavy dues on alcohol, wines and spirits, President Ruto’s first budget will likely be resented by “hustlers’ fond of drowning their economic frustrations in alcohol!
On the debt burden facing Kenya, a former British colony, is a staggering Kshs 7 trillion owed to China for mutliple super highways and the electric speed train (SGR) started in the Kibaki-Uhuru eras. President Ruto has in 8 months been to Europe, USA and middle east but is curiously yet to visit Beijing. The Treasury has urged Kenyans to prepare for tough times as the government struggles to grow the sluggish economy and breathe life in the diminishing shilling that has hit an all time low of Kshs 140 to the dollar.
