Rotich walks tightrope with dams scandal hanging over his head

Treasury CS Henry Rotich is expected to present the seventh budget at Parliament Buildings today, but for the first time he will deliver his speech with graft investigation hanging over his head.

Besides that, he will be unveiling the country’s biggest budget, and potentially the year Kenya Revenue Authority will be under the most pressure with a mountain of State debt to be repaid.

Further, the legislators in both houses of Parliament cannot agree on how much to give to the counties and a settlement that must be struck within two weeks to forestall a shutdown of operations.

Top on the Cabinet secretary’s immediate concerns is how he will manoeuvre around questions from the National Assembly on how realistically he will fund the Sh3.02 trillion budget, considering Parliament’s prior reservations.

Already, the Budget and Appropriations Committee is not convinced that the revenue agency can collect as much as Rotich is projecting, fearing that it is inevitable to shelve some spending plans as the reality of slimmer revenues hits home.

“This means that should the country miss the revenue target, there will be need to adjust the expenditures downwards. This undermines the credibility of the budget and is the main reason behind pending bills and stalling projects,” the committee said in its last review of today’s budget.

Traditionally, Treasury has been overoptimistic in its budgeting process which informs the number of supplementary budgets that follow midway through the financial year to accommodate the emerging financial shortfall.

Rotich has enjoyed an easy ride in office with full support from The Presidency who approved of his expansionary budget, which meant he could borrow aggressively to finance the many projects, some with questionable value for money.

It is the first time that the MPs have been as categorical about the shortcomings in the budget as Rotich has enjoyed some level of cushioning from the Jubilee leadership, including in helping him pass controversial taxation amendments in the past.

President Uhuru Kenyatta lobbied legislators to pass the value added tax on petroleum and the Housing Fund levy, for instance, even after the National Assembly had initially shot them down.

But this time, Rotich could be isolated especially considering the number of times he has been questioned by the Directorate of Criminal Investigations over suspected fraud in the procurement and payments made to troubled Italian dams contractor, CMC di Ravenna.

The CS is among the three ministers questioned but the outcome of the investigations is incomplete, or at least not public yet, with the DCI having sworn to take action on conclusion.

Uhuru is on record saying that everyone should carry their own cross in the fight against graft, in veiled responses to hitherto allies expecting some protection from investigation.

Among the proposals Rotich could be putting forward today are enhanced tax measures to raise Sh1.8 trillion in taxes, a steady increase from the Sh1.6 trillion KRA is expected to collect in the financial year ending June 30.

For him, attaining the revenue targets is critical since he has a bill of Sh800 billion to settle in debts while the country’s scope for borrowing has gone lower than ever before.

He has a new man at KRA, Githii Mburu, recruited last week to succeed John Njiraini whose tenure was marked by a steady revenue growth but was too little for the ambitions of a government too thirsty to spend.

It was during Mr Njiraini’s tenure that tax collection more than doubled from Sh700 billion in less than a decade, with the focus now shifting to whether the growth momentum can be maintained.

Tax experts do not think the growth can be sustained, saying the base cannot yield any more, with some indicating any more taxation would actually be counterproductive as it would discourage consumption.

All eyes now shift to Rotich’s new taxes which many view as inevitable considering the needs, and how the dams probe plays out.