Grow the economy to feed huge budget
Kenyans should brace themselves for tougher times ahead as they cough up an extra Sh200 billion in taxes as Treasury eyes Sh1.76 trillion up from Sh1.5 trillion to fund the ambitious Sh3 trillion budget.
This is likely to be achieved through ongoing tax policy reforms and improved tax revenue administration at the Kenya Revenue Authority.
With the taxman already in the market with new levies, the move is going to put more Kenyans under pressure as new measures such as digital tax and alternative minimum tax start biting, which traders will pass on to consumers.
Treasury hopes to net a total revenue of Sh1.98 trillion which include foreign aid and grants from development partners, to fuel the economy on the back of Covid-19 pandemic shocks.
Premised on a post-pandemic recovery plan, the Government is expected to use the new budget to roll out the Post-Covid-19 Economic Recovery Strategy (ERS), which will mitigate the adverse impacts of the pandemic on the economy.
These moves will determine whether the economy will be re-positioned on a steady and sustainable growth trajectory or not.
As the public starts interrogating the draft Budget Policy Statement released on Monday, it is imperative that focus is made on policies that seek to create an enabling environment for the economy to safeguard livelihoods, jobs, businesses and industrial recovery.
As part of the post-Covid recovery, the BPS must push policies that foster macroeconomic stability, and above all, enhance liquidity for the private sector including initiating innovative products to boost credit to Micro, Small and Medium Enterprises (MSMEs).
The debt question must also be addressed truthfully by the document. Considering the projected expenditures and revenues, the gap between spending and income is projected at Sh937.6 billion compared to the estimated overall fiscal balance of Sh1 trillion in the current financial year.
Treasury will, therefore, borrow a whopping Sh937 billion, with nearly Sh600 billion from the domestic market in a move that will crowd out local businessmen from the banks.
More importantly, before the document is presented to Parliament on February 15, the public must scrutinise detailed budgets to all government Ministries, Departments and Agencies (MDAs) to curtail the growth of recurrent budgets and ensure ongoing projects are completed.