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Treasury accused of failure to control State spending

By Alphonce Shiundu | February 19th 2015
By Alphonce Shiundu | February 19th 2015

Kenya: The Parliamentary Budget Office (PBO) yesterday warned that the National Treasury had failed to tame the amount of money that is used in running the Government.

Economists, fiscal analysts and tax experts, who advise MPs on the budget, said it appeared that the National Treasury was clueless on how to pursue policies to keep the recurrent expenditure low.

In an analysis of the Budget Policy Statement (BPS) currently before the Budget and Appropriations Committee of the National Assembly, the House budget experts said it will be impossible to keep a leash on the spending without clear strategies.

“The Government’s recurrent expenditure has continued to spiral upwards even after the Government said that it shall pursue expenditure rationalisation policies without giving a clear framework,” the PBO said in the paper titled ‘Unpacking the Budget Policy Statement’.

There was also concern that the Budget Policy Statement itself was vague on what measures the Government was taking to increase revenue, cut down spending and making sure that all the growth targets are achieved.

“It is envisioned that the BPS 2015 will be achieved by maintaining a strong revenue effort and containing the growth of total expenditure. However, this seems rather an ambitious target since the total expenditure of the National Government has grown to Sh1.88 trillion from Sh1.69 trillion in the previous year,” the Budget Office said. There was also concern that the Government was keen on borrowing nearly all the money to go into development projects.

The experts argued that the focus on borrowing was simply increasing the deficit and making it difficult for the country to reach a status where it will avoid relying on loans.

Fiscal deficit

“The fiscal deficit is spiraling upwards; therefore, there is a need for fiscal consolidation to improve the primary balance, lower the amount of money that the Government has to borrow and therefore the level of debt,” the House experts noted in their report that was also submitted to the Senate’s Committee on Finance, Commerce and Economic Affairs.

They said the National Treasury, whose boss is Cabinet Secretary Henry Rotich, had to learn to work on realistic growth of the economy, because as it is now, the fiscal environment that focused on high growth was “not attainable”.

“The Government has always propelled reduced timelines for procuring goods in order to purchase them competitively. However, to date, the timeline has never reduced even with introduction of e-procurement last year,” the brief by the Budget Office added.

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