The National Treasury and Economic Planning Cabinet Secretary Njuguna Ndung’u has raised alarm over the dire economic situation currently prevailing in the country and warned Kenyans to brace themselves for tough economic times ahead.
Speaking during the launch of the medium-term Budget preparation at Kenyatta International Convention Centre (KICC) in Nairobi earlier in the week hinted to possible increase of new levies as part of a raft of austerity measures including the suspension of any new construction initiatives in order to weather through the crisis.
“From all the things we have analysed, the outlook of 2023 is not looking very good, there are clear signals that it is going to be a tough year and that the global economy is one example in terms of where we are going.” Njuguna said.
The remarks come at a time when Kenyans are facing tough economic times with energy and food costs soaring amid high inflation.
The CS observed that policy measures will be adopted to bring on board additional revenue as the government looks forward to expanding the tax base, a move set to raid the earnings of workers, companies and businesses that have up to now been outside the tax bracket so as to achieve the milestone.
According to the CS, the plan for the 2023/24 Budget which started in the fourth quarter of 2022 is expected to intensify as the government targets an affordable Budget while aligning spending to its agenda on key growth areas.
“As we prepare the FY 2023/24 and the Medium Term, emphasis will be on aggressive revenue mobilisation, including policy measures, to bring on board additional revenue,” Njuguna stated.
The National Treasury CS stated that the over Sh900 billion rising wage bill continues to be a big obstacle for the budget-making office of Parliament and the National Treasury as he called on legislators and executive action to reduce the cost at both the national and county levels.
The National Assembly Budget and Appropriations Committee Chairman Ndindi Nyoro, however, called on the National Treasury to develop a balanced budget in the FY 2023/24 and do away with supplementary budgets which he claimed are developed because of errors in the budget that can be avoided.
“The amount that goes to the salaries that pay the majority of us working for the 49 billion Kenyans is approximately Sh900 billion, the recurrent maintenance while still earning salary is around Sh600 billion, we must work on our physicals in terms of reducing our deficit and work on our revenues so that we have a more balanced budget,” said Nyoro.
Reports show that in the last two years, the economy has been hit hard by the lingering effects of the pandemic and the war in Ukraine which have so far affected the global markets as seen in skyrocketing oil and food prices.
The CS revealed that the government intends to spend about Sh3.6 trillion in its first full financial year in office when its presents its Budget to the National Assembly in June this year.
Njuguna claimed that if the Russia-Ukraine conflict continues to escalate, the global supply chains will continue to be affected, thereby causing supply disruptions and a surge in inflation hence a possible factor to affect the growth prospects even more across the globe.
He also pointed an accusing finger to the supply disruptions and high levels of inequalities and poverty as yet another factor that would continue to hit hard on Kenyans.
The Budget is being prepared against the backdrop of pressure to address the country’s mushrooming debt that President Ruto has promised not to default on as he has promised to embark on aggressive revenue mobilisation to fund the next Budget.
The National Treasury boss observed that that the taxman missed targets by Sh32.2 billion in the first five months of the current financial year.
“In this regard, the National Treasury has initiated the development of the Medium-Term Revenue Strategy,” said Njuguna.
The CS has called upon county governments to put in place measures to increase their revenue collections by optimising Own Source Revenue collection, adhere to fiscal responsibility principles and clear pending bills.
Njuguna hinted a rough and turbulent 2023 for the global economy even though he projected growth of Kenyan economy as he assured the publics that their comments will be taken into account and be included in the final Sector Budget Proposals.
