Budget 2011 is engineered for hard times
When Finance Minister Uhuru Kenyatta unveiled the Budget on Wednesday, it had all the subtlety that makes it ideal for the hard economic times we are experiencing as a country.
His 2011-2012 Budget made a serious attempt to provide solutions for the high commodity prices and also set ambitious targets for public spending, which has been the key driver of growth of the economy.
It was an honest approach to the twin predicaments of how to ensure growth and sustain development in a hostile economic environment such as the one we are in right now.
Details of how the Government plans to raise and spend the Sh1.2 trillion Uhuru outlined in the Budget are already out there, so we would not labour to repeat the figures. But suffice is to say it defied several grim forecasts, some of which anticipated huge tax raises.
Yes, Uhuru did raise taxes, but he limited the damage to the sectors that are traditionally targeted when every time the Government has cash-related constraints – alcohol and cigarette sectors. Uhuru cleverly atoned for this by granting import duty waivers on essentials like maize, wheat and rice.
The General Election is due next year, and budgets that precede election years, usually have all the hallmarks of a kindergarten lollypop scramble, with major voting blocs handed something to cling to woo votes.
Politics of 2012
We commend the Treasury for moving in to end problems associated with the internally displaced, but hope he did not have the elections in mind when he allocated Sh4.2 billion to resettlement of the internally displaced.
Resettlement of this unlucky batch should not be in any way tied to the politics of 2012. We hope the concerned ministries will take cue from the Budget Day spirit and do what is best for the IDPs and the country.
The Treasury had the opportunity to play politics with the Budget, but instead of using it as political leverage towards the voting masses, it sold it as one of prudence and sound financial management in trying times.
The minister allocated a cumulative Sh100 billion to promote agriculture and enhance food security. This was necessary to stem the spiraling cost of food and lay good foundation for the long-term.
If you are looking for an upside, this could mean a transition to the new Constitution with a Government that invests in areas the general public values.
It is even more heartening that the Government allocated substantial resources to the development of key infrastructural projects, including roads, railways, and renewable energy to boost business and attract investors.
It is all good planning, we acknowledge, but the downside of this Budget is that it assumes the common chemistry lab scenario that requires factors like pressure and temperature to remain constant for ideal experiments to yield expected results.
Thus, for the latest Budget to be realistic, all factors have to remain constant. The occurrence of any unforeseeable natural phenomena like drought or floods would cause serious disruptions and the consequences will be dire.
In theory, the Budget assumes that the economy will be in better shape and the Government will muster enough resources to invest in essentials like education and health care.
This means the Government would have to go back to the drawing board, revise a few things, and cut out some non-priority development to mitigate any emergencies.
This is unflatteringly referred to as management by crisis unfortunately it has now become our way of life. Unfavourable external factors make it imperative and urgent for the Government to gear up the Budget plan for coping with crises.
This is why the Government should always plan ahead, and planning ahead means providing for emergencies.
Whatever action it takes, it should not dither, or be seen to be always revising development targets or the market will lose confidence in its policy-making capability.
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