Limitations in Rotich’s Sh3tr budget could up inflation
SEE ALSO :What Sh210b loan means for KenyaThe budget is normally presented to parliament mid-June every year so that it is operational at the beginning of the financial year that starts on July 1. In the yester-years due to budget reading, civil servants and other State officers were paid by June 21, so that the government could close all its books by the end of June. The Finance Bill and the Appropriation Bill are passed by parliament before the budget can come into effect. Any budget must not be devoid of philosophy. CS Rotich (pictured) on Thursday presented the budget showing item by item, expected revenue and anticipated expenditure for the fiscal year 2019/2020 - detailing government’s plans and programmes through the fiscal year. A good budget should, however, stimulate balanced economic growth i.e sustained increase in GDP to improve the living standards of citizens. It should also reduce poverty and to increase employment. The 2019/2020 budget should aim at providing opportunities to the poor and reducing inequalities in income to boost equality and equity among citizens.
Local industriesBeer, which is popular with the poor, will be taxed at a higher rate than whiskey. The budget appears not to protect local industries yet our problem has been cheap imports. I do not understand why the allocation of miraa is higher than sugar, yet the sugar sector is on its death bed in this country. In any case, miraa and cigarettes are on par. The biggest catch in this budget is that we have a deficit of Sh600 billion i.e the governments estimated expenditure is far more than the estimated revenue. It is okay to adopt a deficit budget to meet the need of the people and to correct unemployment. But in our case deficit budget will hurt if it translates into excessive wastage through government expenditure and costly borrowing. The feeling is that we borrow expensively and waste. We are in a bad situation, mass unemployment, and a huge costly debt burden. The budget did not solve the high-interest rate on government bonds. Literature confirms that budget deficit translates into financial instability. If we continue borrowing, our currency will weaken. Deficit budget will send a negative signal to foreign investors in addition to encouraging wasteful expenditure. I suspect such a huge budget if not adequately backed by real production can send us into a depression. Treasury should answer to what circumstances should a country adopt a deficit budget? Are we generating enough revenue to service government debt? -The writer teaches at the University of Nairobi
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