Calls for Realistic Revenue Projections and Strategic Debt Management dominate the second day of the National Assembly Leadership Retreat
Matters Kenya's Debt Management and Pending Bills dominated the 2nd day of the National Assembly Leadership Retreat, with MPs calling on Treasury to institute sound measures to address unrealistic revenue projections which has not only left huge budget deficits, but which have also seen an astronomical debt accrue inorder to bridge this deficit.
Members present during the forum agreed that there is need to explore through legislative intervention, ways of controlling debt which currently stands at Kshs 5.3 Trillion. They further agreed to replace the current threshold of Debt to Gross Domestic Product from the Net Present Value and explore a numerical value.
Speaking during the forum at Sarova Whitesands in Mombasa, the Chairperson of the Budget and Appropriations Committee, Hon. Kimani Ichung'wa, took issue with Treasury's laxity in adhering to the Debt Management Strategy Paper, even as the country continues to accrue more debt to fund huge capital infrastracture investments which are poised to unlock the country's potential for robust economic growth.
He decried Treasury's continued declaration of huge strategic revenue projections, yet projections for the previous financial years had not been met.
" We have never been realistic in our revenue projections. If we do not meet the targets for the last Financial Year, how do we meet the projections for the next one which are even higher?" he posed.
He was reacting to a presentation by the Mr. Benson Kiriga from the Kenya Institute of Public Policy and Research(KIPPRA) and Treasury's Director of Debt Policy, Strategy and Risk Management, Mr. Daniel Ndolo who had argued that Kenya's debt levels are still within sustainable levels, and that all that the country needs to ask itself is if the money was being channeled to the right causes.
They however observed that the government needs to address the question of governance and the war against graft, so that borrowed money can make economic sense.
Mr. Ndolo also underscored the need for tax reforms, adding that Kenyans need to address their attitude towards payment of taxes, noting that the Kenya Revenue Authority needs to do more civic education in that regard.
Currently, the authority is only able to collect 60% of the projected revenues.
Members however observed that in future, the country could be spending too much of the country's foreign earnings to pay debt, given that a change in the dollar exchange rates could accrue huge interests.
Additionaly, they called on the government to evaluate the kind of investment funded by public debt. Adding his voice to the debate, the Leader of the Minority Party, Hon. John Mbadi challenged the Treasury to come up with a clear strategy on debt management and urged them to offer capacity development to counties in regards to fiscal management and debt recovery.
The forum was further concerned by huge pending bills both at the National and at the County Level, noting that the non payment of bills had brought Small Micro Enterprises (SMEs) to their knees hence hugely affecting the growth of the economy. The National Government and Counties currently owe approximately Kshs.400 Billion, majority of which is owed to SMEs..
Ms. Miriam Bommet who represented the CEO, Kenya Association of Manufactures (KAM) at the forum, also expressed the challenges faced by the Private Sector, following the failure by the two arms of government to address the pending bills, noting that the issue has greatly affected their members' operations.
On this front, Hon. Ichung'wa called on called on Committee Chairs to scrutinize Ministry requests when they appear before Departmental Committees next week to present their budget estimates for the Financial Year 2019/2020.
He implored upon them to ensure that the accounting officers prioritise on pending bills as their first item of expenditure, and that they spell out the austerity measures they have put in place to enhance prudent public finance management.
MPs further observed that there is need to review the interest rate capping to address the issue of borrowing of funds by SMEs which are currently facing difficulties with financing from banks.
Kitui Central MP, Hon. (Dr.) Makali Mulu however argued that the best strategy is to allow market forces to determine the interest rates. The Act which was championed by Kiambu Town MP, Hon. Jude Njomo was recently declared unconstitutional, but the judges suspended the ruling for 12 months to allow Parliament to re-examine the law.
Further, the House leadership has also resolved that the consideration of the Appropriations and Finance Bills be harmonized so to ensure passage before commencement of a new financial year.