NAIROBI, 10 April 2021 – Kenyan members of parliament (MPs) are pushing the government of President Uhuru Kenyatta to embrace austerity programs and focus on rescuing the struggling economy.
The East African nation’s economy contracted to 0.6 percent in 2020, down from 5.4 percent in 2019.
Kenya’s economy is projected to grow by 1.3 percent in 2021.
MPs want the Kenyan government to curb spending, reduce borrowing and defer new projects in favor of providing much-needed stimulus spending needed to save the country’s struggling economy.
“With the low growth, low revenues, high expenditure, and high debt service pressure the design of expenditure policy should shift towards extracting maximum value from each tax shilling collected or debt shilling incurred,” a recent report by Kenya’s Parliamentary Budget Office (PBO) reads in part
The report urges the government to rationalize recurrent spending, to freeze nominal expenditure growth for all spending categories, particularly for the energy and infrastructure sectors.
MPs want infrastructure spending limited to major road networks. Lawmakers are encouraging work-from-home arrangements for public servants and encourage a shift to online platforms for meetings to reduce demands on operations and maintenance
The calls come as Kenya’s Cabinet Secretary for the National Treasury, Ukur Yatani, is preparing to table a plan that seeks approval for Ksh3 trillion ($27.52 billion) in spending for the fiscal year 2021/2022.
Kenya’s debt repayments is taking a large share of tax revenues, according to the MPs.
Kenya’s debt repayment expenditure, estimated at Ksh925 billion ($8.48 billion) in 2020/2021, is expected o reach Ksh1.02 trillion ($9.35 billion) by the end of the fiscal year 2021/2022.
Interest payment on Kenya’s foreign debt has increased from about one percent of exports of goods and services to close to 10 percent.
Kenya’s tax revenue as a share of GDP declined to 14 percent in the 2019/2020 fiscal year from 17 percent in 2013/2014.