When he came in, Central Bank of Kenya Governor Patrick Njoroge endeared himself to Kenyans with his honesty. Kenya, he said, had to check its appetite for debt. Non-essential spending such as conferences, hospitality, traveling would be slashed.
Then, acting Treasury Cabinet Secretary Ukur Yattani acknowledged that for the period that the austerity measures would be undertaken, probably in two financial years, some people, including those in the private sector, would be hit. Most Kenyans welcomed the recommendations aimed at improving the country’s financial hygiene.
Even if Kenya was to borrow, it was going to try as much as it could, to borrow cheaply. As for the expensive commercial loans, the country had embarked on a rigorous process to replace them with concessional ones.
But five months later, the numbers coming from the Treasury are not comforting. Government’s austerity programme is certainly facing some headwinds.
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The austerity plan did not involve brutally cutting spending alone, the Kenya Revenue Authority would also go after tax cheats.
But if the first five months are a precursor to what is likely to happen in the next seven months, the country might need to borrow more.
Although the government has increased tax revenues for the period between July and October by around 13 per cent, total expenditure has increased by 19 per cent. Still, the government must find a lasting solution to fix austerity and stabilise the economy.