24 May 2013

Kenya: Sh163 Billion Deficit Worries House Budget Committee

A parliamentary committee has raised the red flag on the shortfall in the 2013-14 budgetary estimates.

The Parliamentary Budget and Appropriations Committee chairman Mutava Musyimi warned that the government may resort to domestic borrowing resulting in an increase in the interest rate to bridge the gap.

Musyimi (Mbeere South) said the Sh163 billion deficit is likely to force the government to finance the Sh1.6 trillion budget through local borrowing, a situation that will impact negatively on the economy.

"The government will be required to go an extra mile in stopping corruption and sealing tax evasion loop holes and probably raise taxes to finance the deficit. It is not just the wage bill alone that will make the difference," he explained.

His vice chair Mary Emaase (Teso South) said the committee will look at all possible alternatives of how funds can be raised and advise the government accordingly.

"We have very little for the national and county governments. The question is who will bear the burden of the deficit. Will it be the county or national government, or will they share the burden," she said.

Emaase warned that borrowing from the domestic market will be very expensive for the public.

The two were speaking at the Parliament Buildings after chairing their second meeting since the committee was constituted early this week.

The committee members had raised concerns that the national debt is too high and that the government competition with the private sector for local funds will aggravate the two situations.

This may adversely affect the projected 6 per cent economic growth as per the economic 2013 survey report released yesterday by Devolution and Planning Cabinet Secretary Ann Waiguru.

"The debt is going up, so is the wage bill. When the recurrent expenditure is too high, the development expenditure is likely to fall short," Musyimi said.

The committee is set to make a routine visit to ten counties from Thursday next week to collect views from the public on the 2013-14 budget.

The counties include Kakamega, Kisumu, Uasin Gishu, Nairobi, Nakuru, Nyeri, Embu, Isiolo, Garissa and Mombasa.

"We would have wished to go to the 47 counties but time is not on our side. We hope next year we will have an opportunity to visit more places," he said.

The 51-member committee is divided into groups that will collect public views separately.

It will later invite officials from the Treasury for deliberations before compiling its report which will be tabled in the National Assembly for debate and approval.

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