There is an urgent need for Kenya to cut its annual budgets that have led to a high domestic and public debt, Amani National Congress leader Musalia Mudavadi has said.
Speaking at a media round table on Friday where he outlined his economic plan ahead of the 2022 general elections, Mudavadi who is keen on succeeding President Uhuru Kenyatta said high public debt has seen Kenyans taxed to the last coin.
''This is not sustainable. Families are sinking deeper into poverty, the country's creditworthiness shrinking. We must arrest this trend or risk sliding further,'' Mudavadi said.
He termed the current public debt standing at Sh7.7 trillion or more than 65 per cent of GDP as unrealistic hence the reason why both the cost of doing business and living is exceptionally high.
"This year, the government is going to spend more than half of domestic revenue to pay debts and the remaining on recurrent budget. What is left for development,'' Mudavadi posed.
According to the National Treasury, the government has set a total budget of Sh3.03 trillion for the current financial year. It is expected to borrow Sh929.7 billion to fill the deficit.
“The fiscal deficit in the 2021/22 budget will be financed through net external financing of Sh271.2 billion equivalent to 4.4 per cent of GDP, and net domestic financing of Sh658.5 billion equivalent to 5.3 per cent of GDP,'' Treasury data show.
By June 2022 when the budget is fully implemented, the stock of public debt is expected to have shot up by Sh900 billion to Sh8.6 trillion from Sh7.712 trillion end of the last financial year.
To correct this, the ANC leader if elected, his government will only fund viable infrastructure projects to ensure the country lives within means.
This drastically cut over-reliance on debts that have seen the current government increase taxes, hurting both businesses and families.
He chided President Uhuru Kenyatta's government for failing to focus on an economic blueprint targeting universal health care, manufacturing, agriculture and affordable housing to uplift citizens' living standards.
''The Big 4 was a clear economic agenda that the current government has failed to capitalise on for the good of this country. My economic policies touch on vital sectors that will fuel holistic growth,'' Mudavadi said.
He said his government will cut electricity costs by half from the current 40 per cent of production to fuel the manufacturing sector and create job opportunities.
He promised to allocate more funds to the agricultural sector, which accounts for 35 per cent of the country's GDP from the current three per cent.
''We refer to Kenya as an agricultural economy yet we allocate less than five per cent of the budget to the sector. I will pump more funds in food production, value addition and marketing to rescue farmers from poverty,'' Mudavadi said.
He rubbished economic models by his opponents as academic and out of touch with realities.
His remarks seem to take a swipe at Deputy President William Ruto's bottom-up economic model that has been subject to public debate in the last few weeks.
The economic model advocates for the promotion of investments by ordinary citizens and empowering them financially to generate taxes to spur the economy.
"Rationalization of public expenditure does not need economic models. It requires practicability. People want money in their pockets, that is what my government will deliver,'' Mudavadi said.
