Rotich's Sh2.7 trillion budget offers little hope to taxpayers

Treasury CS Henry Rotich at a past function.

On Tuesday, the National Treasury presented the 2019/20 budget estimates. Though according to Treasury, the proposed expenditure will prioritise job creation, youth empowerment, manufacturing, enhance health coverage, improve food security and uplift the living conditions of the people, keen observers quickly dismissed the Sh2.7 trillion budget as of unhealthy mix:Treasury must borrow about Sh600 million to plug the deficit; moreover, recurrent expenditure like salaries and allowances, fuel and stationary will gobble up Sh1.7 trillion.

In the end, Henry Rotich's wish list fails the test of viability. Saddled with many maturing debt obligations from infrastructure projects like the SGR, LAPSSET and roads coupled with unattainable tax targets- as a result of a slowing economic activity- it is highly likely that the government will borrow to pay debt. In other words; digging a hole to fill up a hole. That has far-reaching and long-term effects on the economy.

Additionally, size wouldn't matter much if the funds are utilised well. Alas! Nearly half of that will be "eaten" by the lords of corruption that have embedded themselves in the system thus undermining the budget plans.

Few will take comfort with the allocation of Sh450 billion to help actualize President Uhuru Kenyatta’s Big 4 Agenda that includes manufacturing, affordable housing, universal health and food security.

If executed well, the Big 4 can be the perfect cure to the country’s intractible problems of poverty, ignorance and disease. Should this Agenda work out as planned, ordinary Kenyans will be able to free up a lot of their income which they can use to uplift their living standards.

However, it is the feeling of Kenyans that the Government is getting ahead of itself.

All the four plans are in the initial stages, with the Government still looking for experts to advise it on how to implement some of them. The Affordable Housing Programme, whose operationalization was boosted after the World Bank approved financing worth Sh25 billion, is still entrapped in a Court case coupled with public skepticism.

Some experts have even wondered whether it will be possible for half a million houses to be built in the next three years. We are not praying for the Big 4 to fail. As a business, we can only thrive when Kenyans- our readers- are doing well. But our optimism must be tampered with reality on the ground.

As we have said before, there are misgivings about the Big 4: that it is amorphous, particularly because it has not been distilled into a law or policy. Should we then be pumping billions into an amorphous project?

Perhaps the biggest worry among Kenyans has been how President Kenyatta will implement his pet project without overburdening them with taxes and levies. The Sh450.9 billion, whether borrowed or through taxes, will be paid by Kenyans.

Meanwhile little has been done to get buy-in from workers about the controversial 1.5 per cent deduction on workers’ basic salary towards the Housing Development Fund. This levy has been fought fiercely by both employees and workers. It is now a matter in court.

All in all, there remains so much that needs to be done to get the Big 4 off the ground, a generous budget allocation notwithstanding. There is also much work needed to ensure that the economy is in full throttle to guarantee the much needed jobs and improved livelihood.

The Sh2.7 trillion budget was released amidst reports that consumers are paying more for goods and services after the inflation rate jumped to 6.9 per cent- the highest in nearly two years. This is attributed to delayed rains and the prolonged drought.

A high inflation rate erodes the spending power by limiting the amount of money one can spend on non-essentials that are key drivers of the economy. In the period, housing, water, electricity, and the cost of transport has risen exponentially. No wonder we seem stuck in the same place.

When that happens- and it seems it has- consumers will concentrate on the basic needs. Then the economy shrinks.