The current Budget crisis is self-inflicted by Jubilee government due to lack of fiscal discipline.
Given the escalating stalemate over the budget and taxation, President Uhuru Kenyatta ought to think out of the box. In situations of paralysis like this, governments resign or dissolve.
Uhuru Kenyatta should dissolve his current crisis ridden government to reconstitute and re-engineer it anew to regain a foothold in Kenyans’ confidence.
The lack of confidence cuts across all segments of Kenyan society whose manifestations are;
– There is a crisis of confidence over Jubilee government inability to efficiently manage the economy. Kenyans have lost confidence in government over its financial indiscipline.
– There is agreement across the political divide that corruption is endemic in government and a large contributor to the budgetary crisis the country is facing. This is magnified by the fact that a large chunk of the burdensome loans and the budget are stolen within government bureaucracy.
– The ruling party cadres are at variance with the President. They’ve publicly expressed their anger at Treasury technocrats for apparently “misadvising” the President.
– The President himself has voiced disappointment with the shabby performance of his Treasury appointees in providing cogent economic solutions when he stated that the Finance Bill “fell short of (a) threshold. It protected the status quo and sacrificed the bigger vision”.
– The President is irked that his technocrats have put him at cross-purpose with key governance institutions. They caused a deep in relationship with the Judiciary when they expurgated its budget. He is then at variance with Parliament he accuses of taking “the easy path, instead of rising to the challenges of our time. It was good politics, but bad leadership.”
This disaffection within and outside government concerning lack of consistent fiscal policies is pervasive. But the Jubilee government is living denial over the rampage borrowing spree that has boomeranged. With a sh5.4 trillion debt and growing, creditors with due payments have come calling. The government is unable to service the debts and resorts to over taxation of Kenyans because;
– It borrowed expensively and repayment period was very short.
– The extravagant projects loans were spent on are not making a return that can service the loans, instead, they’re consuming more loans.
– a huge portion of the loans is pilfered. To date, Kenyans have never been told what Eurobond I, rescheduled and now again due for repayment, was used for. It is Treasury that shocked Kenyans with the admission that it didn’t know what government departments did with their share of Eurobond disbursed to them. Of course, this was sheer despondency.
I was supportive of the president’s capping VAT on petroleum products at 8%. However, the President anger is misplaced when his proposals attack the sustainability of the poor. It is as if he is punishing Kenyans for daring to oppose implosion of punitive tax. He is taking with both hands giving nothing back.
Balancing the budget need not punish the poor by cutting funds to counties, Equalisation and roads funds, stipends to elders or free maternity services. All these services whether by National of County governments target the poorest of the poor. This is double-jeopardy for the marginalised.
Unfortunately, most of the President’s proposals amount to an attack on devolution. And this the President confirmed when he blamed the Constitution that has “fundamentally altered the structures and functions of government” and brought with its “a substantial increase in political and bureaucratic representation at every level”. This was unfortunate for a leadership that swore the oath of office to protect and defend the Constitution.
These actions in his proposals cancel out any magnanimity that was 50% reduction on VAT.
If corruption, pilfer age, looting and wastage can be contained in government, those funds can cover budget shortfalls and even serving debts comfortably.
What the President needs is, in his words, not politics. He needs pragmatic, predictable and consistent financial management. He must dissolve to re-engineer government.
Hon. Musalia Mudavadi, EGH
ANC Party Leader and NASA Founder