Kenya: Henry Rotich - I'll Fund This Budget Through Taxes and Debt

Treasury Cabinet Secretary Henry Rotich says he will fund the new budget through taxes and debt.

Speaking in his office on Wednesday ahead of Thursday's Budget statement, the finance boss said he would be seeking to get more Kenyans who are escaping the tax net in the past to be brought in the bracket.

He told reporters that Kenyans should not expect too many additional taxes in his next Budget but amendments to the already existing tax laws to close loopholes for tax cheats.

"We will refine tax laws to address any challenges witnessed in the previous year. We will also try to make sure many more people are paying taxes to expand the tax base," Mr Rotich said.

He said Kenyans should not be too worried about borrowing given that it has been done in a sustainable manner. He said as long as the government was not using the borrowed money to fund recurrent expenditure, then there should be no fear of default.

Mr Rotich said his Budget will seek to support the local business environment as well as address challenges faced by small businesses.

WAGE BILL

But the huge expenditure on salaries continues to attract reactions from members of the public and politicians who argue that the government would not need to borrow too much if it dealt with its wage bill.

"In a budget of Sh3trillion, half of it goes to people who are employed by government (recurrent expenditure), salary, mandazi, travel and flowers. In a country of 50 million people, civil servants are not more than one million. We have to ask ourselves, for how long are 49 million people going to carry the burden of one million?," Gatundu South Member of Parliament Moses Kuria said.

The national government plans to spend Sh1.7 trillion to run its programmes, pay salaries and generally make sure all operations continue.

Counties will receive Sh371.6 billion, while the Consolidated Fund Services has an allocation of Sh805.8 billion, the bulk of which will pay debts.

Parliament will receive Sh43.6 billion, the Judiciary will get Sh18.9 billion, while Sh5.8 billion will go to the equalisation fund.

BUDGET DEFICIT

Treasury has come under criticism for making budget deficit a moving target.

Mohamed Wehliye‏, an advisor to the Saudi Arabian Monetary Authority (SAMA), has hit out on the Treasury for never meeting its deficit targets.

"Projected numbers are always rosy. Ignore them. Look at the actuals. Treasury, in every budget, will tell Kenyans that the budget deficit is 5-6 percent and projected numbers will even go down further. But look at the actuals. Almost hitting double digits. Disastrous," he tweeted.

In the new financial year, Treasury is staring at a budget deficit of Sh607.8billion.

Treasury hopes to plug this deficit by borrowing Sh324.3 billion from the external markets and Sh289.2 billion will come from the domestic markets.

In total, it will therefore borrow Sh613.5 billion, which is over and above the budgeted for deficit by Sh6.5 billion.

Rotich is expected to unveil the new tax measures Thursday afternoon.

More to follow...

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