For a long time, Treasury has not walked the talk on the thorny issue of austerity. Instead, the budget has continued to grow bigger.
Inflated budgets would be justifiable if the money was well spent on projects such as roads, bridges, ports and dams. Unfortunately, a good chunk of the money has been sunk into salaries and allowances. Civil servants have pocketed billions in per diems for conferences and training that have added no value to taxpayers.
Even when the money has been sunk into development projects, it has been stolen and some of the projects have stalled. According to the Parliamentary Budget Office (PBO), there were 545 stalled projects valued at Sh366 billion as at June last year.
Other Public Private Partnership (PPP) projects valued at Sh1.1 trillion have since stalled at the procurement stage, according to the International Monetary Fund (IMF). But for the first time, the next budget will be lower than the previous one. Moreover, tax collection targets have not been exaggerated. Kenya Revenue Authority will not overstretch itself trying to hit a distant target.
This is a major milestone for Treasury’s fiscal consolidation plans, where it intends to narrow the gap between the amount of money it spends and the cash it collects in taxes. That is why one would be impressed by Cabinet Secretary Ukur Yatani’s bold decision to review downwards total spending in the next financial year ending June 2021. As part of austerity measures, the government plans to spend Sh2.74 trillion during this period, down from Sh2.87 trillion for this financial year. Such measures should help in dealing with the debt menace that threatens to push the country beyond the financial cliff. Increasingly, much of the money the Government has collected in taxes has been gobbled up by creditors. Almost half of what the country earns is doled out to creditors.
It is also encouraging that the team at Treasury plans to reduce its debt appetite in the next financial year. This is a welcomed development after they moved to make debt matters transparent. The money that the country can now borrow has been turned into a nominal number rather than being pegged on national output, or GDP. The debt ceiling has been put at Sh9 trillion.
Yatani’s predecessor was not transparent on the country’s stock of public debt. That is why IMF recently called them out. Short of accusing Treasury of cooking numbers, IMF lambasted former CS Henry Rotich's team for blindfolding the public by using different debt-ceilings when calculating the sustainability of the country’s debt.
But it won't be easy for the current team. The road ahead is bumpy. Some of the agencies that have fallen victim to Yatani's axe are Judiciary. Chief Justice David Maraga's team has also lost close to Sh5.5 billion as Government goes about its budget-trimming measures. MPs will also be up in arms after Treasury, through the Draft Budget Statement, slashed their budget by almost Sh4 billion. Sobriety must reign in these trying times as the country tries to get its fiscal footing.