Only real austerity will save nation from going into massive debt

The just-concluded summit between the heads of our two levels of government couldn’t have come at a better time. It’s that time of the year when our governments start preparing their budgets for the next financial year, usually focused more on their planned expenditures rather than revenues. It is often assumed in our budgets that revenues are a matter of course, and will be collected. If it is insufficient, we borrow to finance the gap, period! This assumption is gaining currency even among the county governments, with most counties clamouring for powers to borrow without hindrance.

This nation will likely be brought to its knees not by the negative ethnicity in its political rhetoric and the corruption culture but by the insatiable appetite of our public sector to live large. If we keep the course, our lenders may place us on the table for auction soon. We are neck deep in debt, and we are borrowing impulsively but the taxpayers have not always felt the benefits of the massive borrowing. This financial year, Treasury will spend Sh483 billion to service our debts; this amount is nearly a half of our annual revenue collections.

Our national revenues are not growing even half as fast as our expenditures. We are likely to be below our projections this year by at least 10 per cent. Counties aren’t doing better; few have registered any significant growth in revenue in the past three years. Our hopes that devolution will lead to the baking of a bigger cake nationally is beginning to fade because the county governments have set their eyes solely on how to spend. Kenya Revenue Authority too is today a pale shadow of itself, amid rising complaints of massive corruption in its ranks.

That’s why I feel encouraged by the Summit pronouncements that it will commit their respective administrations to a strict austerity programme in order to limit government borrowing. Both levels of governments have often been accused of wastage and extravagant spending. County governments did not start crawling but ran off in opulence and conspicuous consumption as both the executive and the assemblies outpaced each other in raiding their treasuries. Other independent institutions and commissions shared the opulent culture in a nation where half the population lives in deepening poverty. Our institutions of oversight have failed to rein in the Executive, and are in most cases in on the take.

We need to enforce austerity in the same way that the highly indebted Western countries are doing — bite the bullet! Any measure introduced must be actionable, and must bear consequences for those with responsibility. Treasury must penalise accounting officers who flout financial regulations regarding public expenditure, and austerity measures declared by the President. In this regard, the President as the appointing authority, should give Treasury full authority to transact such actions.

The Controller of Budget ought to develop appropriate tools for checking compliance in the counties. There should be no approvals for exchequer releases unless counties demonstrate fidelity to the law, and the austerity measures they commit to. Many are already concerned that this office ought to have prevented the proliferation of pending bills that are now choking most counties. There are genuine concerns that the next tranche of governors may inherit massive debts, mostly fictitious.

Hence, Treasury’s action to warn banks against lending to counties because of concerns that we risk debt crisis of epic proportions that will render some counties unviable. Borrowing by counties must be subjected to parliamentary approval as required by the Constitution, except for short-term facilities that can be approved by their assemblies. Or else, we shall perish.