FISCAL DISCIPLINE

Parliamentary caucus seeks reforms in budgeting process to clip runaway debt

Reforms aimed at injecting realism and fiscal discipline in the budgeting process

In Summary

• The Parliamentary Caucus on Economy and Business also rooted for the need to enhance the independence of the national debt office.

• The forum further agreed to continue advocating for the systematic formalisation of the economy as a means for raising revenue for economic growth and development.

Treasury CS Ukur Yatani speaks during the Budget reading at Parliament on June 11, 2020.
Treasury CS Ukur Yatani speaks during the Budget reading at Parliament on June 11, 2020.
Image: EZEKIEL AMING'A

A Parliamentary caucus has proposed a raft of radical reforms to inject realism and fiscal discipline in the budgeting process and to ensure the national debt remains at sustainable levels.

Speaking during a two-day stakeholders engagement forum in Mombasa County this weekend, the Parliamentary Caucus on Economy and Business also rooted for the need to enhance the independence of the national debt office.

They also backed the strengthening of budget implementation monitoring and evaluation framework and for the execution of House resolution.

The caucus chaired by the Kiambu Town legislator Jude Njomo, further noted that there is a need to consolidate revenue mobilization and foster a multi-sectoral approach towards economic growth and development.

While making his opening remarks, Njomo noted that the forum was timely as the process of the consideration of the budget estimates has just kicked off at the National Assembly.

This follows the tabling of the Budget Policy Statement and the 2021 Medium Term Debt Strategy paper, on the floor of the House last week.

He called on his fellow legislators to support legislative interventions that will instil fiscal discipline and which capture the reality of Kenya's economic outlook and the country's debt portfolio.

"There is a need to keep an eye on Kenya's fiscal policy and debt sustainability. We do not have a problem with the uptake of debt to spur the economy, but we must put in place punitive measures which will instil fiscal discipline and create consequences for those who deviate from the fiscal regime," noted Njomo.

The forum also called upon the National Treasury to ensure that policies geared towards post-Covid recovery are cascaded all the way to the lowest level possible in the forthcoming budget.

The forum further agreed to continue advocating for the systematic formalisation of the economy as a means for raising revenue for economic growth and development.

This they noted, can be enhanced by bringing traders and small scale operators into the formal economy and fixing credit operations by progressively reducing government borrowing from commercial banks.

Among other measures adopted by the forum include the review of the double taxation menace arising from multiple cess charges across counties and the need to formulate policies and laws limiting participation by foreigners (outside EAC) in small scale trading.

Participants however decried the current harsh business environment for Medium and Small scale traders and the current trend by the Ministry of Trade and Industrialization to only support big manufacturers and entrepreneurs at the expense of their counterpart small micro-entrepreneurs despite the latter's crucial place in solving the youth unemployment puzzle.

They urged the government to closely collaborate with the chamber of commerce to support micro and small enterprises to make recovery from the economic vagaries of the Covid-19 pandemic.

Speaking on the matter of the status of the economy with a focus on revenue-raising gaps and potential, the forum called on the government to curb the penetration of dumped and subsidy products from foreign states into Kenya and for the rationalization of the domestic tax regime in Kenya with that of the region to stimulate investment.

They also urged the Kenya Revenue Authority to employ alternative dispute resolution mechanisms to resolve pending court cases.

The legislators also want to see the operationalization of the Nairobi Financial Centre Act to boost investor confidence in the country.

Making their submissions to the forum, the Okoa Uchumi Coalition appealed to the legislators to ensure that the 2021/2022 Financial Year deficit is reduced by 50 per cent as an impetus for fiscal consolidation.

They called on the National Treasury to include details of all loans I the Budget estimates under the government ministries and departments and the location and status of on-going programs.

They further urged that the National Assembly ensures there is a new debt ceiling formula that takes into account debt sustainability principles and provides an up-to-date debt register as a budgetary item in the next budget.

The forum which ends today is scheduled to hold deliberations on stimulating smallholder Agribusiness for wealth creation and social-economic development and review Kenya's potential in the winery business.

Besides the Parliamentary caucus, the forum has drawn participation from the Parliament Budget Office, the Kenya Institute for Public Policy Research and Analysis (KIPPRA), Commission on Revenue Allocation, Okoa Uchumi Coalition, Westminster Consulting, the Kenya Wine Agencies among others.

Members present were Njomo (Chair), John Kiarie, Prof. Jacqueline Odour, Joseph Mutunga, James Wamacukuru and Eve Obara.