The Budget saga continues unabated, and it is still unclear whether the 2011/12 budget speech will be read on June 8.
Nonetheless, the process started Thursday with a Tweet from the Finance Minister saying he would be providing the link to the estimates.
He even put a statement on his ‘Tuko Pamoja’ page, which included highlights of the estimates for next year.
True to his word, the estimates were uploaded onto the Treasury website.
Unfortunately, the volume of traffic was too high and it promptly crashed at 3:45 pm before we could analyse it properly.
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Clearly, the hype surrounding this year’s Budget has many more people interested — Kenya on the road to being a technology-driven nation.
His statement went some way to help the general public understand what the Budget process entails – "usually takes 10 – 11 months" and explaining how what had been done was in the spirit of Chapter 221 of the new Constitution.
Uhuru included a plea to Parliament to allow him to present the Budget speech on 8 June as originally planned, and indeed as agreed with the other East African countries, as was the the impact on investor confidence if this did not happen.
"A commitment to improving the lives of our people is steadfast," Uhuru said.
But in a period of spiraling expenditure and lower than anticipated revenues – one wonders how is this going to be possible.
To begin with, the minister presented the largest Budget in Kenya’s history for the second year running.
He wants to raise public spending for the 2011/12 fiscal year to Sh1.155 trillion, which needs to be financed.
Is the already beleaguered taxpayer going to bear the brunt, or are we headed into increased debt?
In these circumstances, the easy way out would be to raise taxes, but this would be a retrograde step.
Indeed, it cannot be an option that he is seriously considering, given the Government’s promise to help the poor of our society.
This, therefore, means the minister must get innovative so that he can find the revenue to balance this huge expenditure budget.
Perhaps Uhuru needs to consider reducing some tax rates to stimulate the economy. Can you imagine what a reduction in fuel taxation would do to help industry in this country, not to mention making it more affordable for the mwananchi?
And if tax revenue is not the option, can the answer lie in increased debt? Perhaps, but on the other hand witness what has happened in the Euro Zone. We certainly don’t want to go the Greek route – there will be nobody to bail us out.
And if debt was to be raised from the domestic market, this will have an impact on interest rates and have a knock-on effect on our economic recovery— to the extent that it is recovering.
Meanwhile, the Government needs to remember that they need not fund development in Kenya single-handedly. Public Private Partnership (PPP) would create an excellent avenue for infrastructure development. The private sector will certainly come on board if the parameters are correctly set and I am sure that government and the private sector can work as one!
— Nikhil Hira is a Partner at Deloitte East Africa