EDITORIAL: Why big allocations in Budget worrying


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The Sh2.62 trillion Budget unveiled by Treasury Cabinet Secretary Henry Rotich last week has drawn strong criticism from experts because it does not reflect the realities on the ground.

Economic indicators point to declining performance. Agriculture, the mainstay of the economy, is doing badly due to prolonged drought, while tourism is just rising from the ashes after periods of stagnation. Businesses are crumbling with dozens of corporates giving profit warnings and laying off staff to stay afloat. Bank loans that spur business growth have gone down due to the interest cap introduced last year.

Tax collections have consistently been below target. Last year, for example, Kenya Revenue Authority brought in Sh1.21 trillion in tax, yet the target was Sh1.217 trillion.

Even if the targets were met, a huge Budget deficit would still remain. Clearly, an analysis of the Budget indicates that it is driven with the August elections in mind.

Emoluments for public servants as well as teachers are being raised to please them and soften their stand against the administration.

Acutely aware of their pledges on infrastructure development such as roads and railways, as well as energy, huge sums of money are being allocated for these.

Similarly, the laptop project for primary schools, a key plank of the Jubilee election campaign in 2013, but which has faltered since, has got a big allocation – Sh13 billion.

The question is: How will the government fund this ambitious expenditure plan? Two main options advanced by experts are borrowing and raising taxes – both quite painful. Already, the country is treading dangerously on the debt burden that stood at about Sh3 trillion last year, translating into a ratio of 49.7 to the GDP.

This, experts warned, was reaching unbearable levels. Introducing new levies will raise the cost of living and dampen economic growth.

Mr Rotich must properly explain how he intends to fund the Budget. It is unfair to ambush the citizens midstream with tough choices to raise cash to finance the Budget because the options were not thought through and articulated upfront.

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