Treasury rejects MPs new pay deal

By Alex Ndegwa

The Government swiftly rejected the hefty perks Members of Parliament awarded themselves on Wednesday. Treasury rejected the proposal that would have seen an MP’s monthly pay increase to Sh1.2 million from Sh851, 000, saying the pay rise had not been factored in the 2010/2011 Budget.

Finance Minister Uhuru Kenyatta explained the estimates for this financial year do not include any additional allocations to the National Assembly for salaries and other benefits.

"The Budget estimates as presented had exhausted the resource envelope that could be realistically mobilised. Therefore, the additional expenditures can only be financed either through additional borrowing or imposition of higher taxes, both of which have far reaching economic and social consequences," said the Deputy Prime Minister in a statement sent to newsrooms at 7pm yesterday.

Although the Deputy Prime Minister indicated Treasury was open to negotiations with MPs, the action stressed his reluctance to table in Parliament necessary Bills amending the relevant legislations.

Uhuru explained the higher salaries would be counter productive at a time Treasury had taken measures to generate additional savings from recurrent expenditures for financing critical development projects such as roads.

The minister said recurrent expenditures consumed about 97 per cent of ordinary revenue, leaving a paltry three per cent for development, a situation even MPs had agreed was not sustainable.

He added MPs have also been vocal against excessive borrowing and advised on the need to reduce the tax burden.

"The actions taken by Hon Members are not supportive of these noble objectives because they will trigger demands for salary increment by other sectors. Consequently, these will lead to a wage spiral, hence creating inflation and weakening our competitiveness," said Uhuru.

That would undermine the competitiveness of local goods because prices would soar, an undesirable development coinciding with the birth of the Common Market for the East African Community.