EDITORIAL: State must manage our taxes prudently

One of the crucial issues that has dominated public debate since the Budget was read this week is rising public debt. The government’s proposed budget is Sh2.8 trillion, but its projected revenue is Sh1.6 trillion. National Treasury Cabinet Secretary Ukur Yatani has budgeted for a Sh835 billion deficit, and the plan is to plug that gap with borrowing.

Already, the country is reeling under a Sh6.4 trillion debt burden accumulated mainly in the past seven years under the Jubilee administration. In 2012, the debt portfolio stood at Sh1.6 trillion but that has risen astronomically, creating a fiscal challenge. The problem is this: Sh900 billion of the debt is due for repayment and that means revenues collected must first be used to offset the debts before committing the remainder to national recurrent or capital expenditures. A way round it is to borrow more to pay off the debts, but the net result is that a country is forced into a debt treadmill.

But that is part of the story. Often, borrowed cash is never put into any meaningful use, as the bulk is stolen or wasted in phantom projects. A case in point is the Sh280 billion Eurobond that was borrowed in 2014. To date, the government cannot account for that money. Former Auditor-General Edward Ouko categorically stated that their audits could not capture where the money went and what purpose it served. Further and cryptically, he stated that most of the projects in the annual budgets are vendor-driven; mere conduits for stealing from the public.

Against this background, Mr Yatani pronounced himself on two things. One, financial discipline; that the government has to manage its cash prudently and in particular account for all the loans. Consequently, he undertook an audit of all loans to establish usage and, where applicable, negotiate with lenders to redirect some of the money to more productive ventures if it has not been spent.

Secondly, the minister increased budgetary allocations for the Ethics and Anti-Corruption Commission and the Directorate of Public Prosecutions, with the express objective of enhancing their capacity to fight corruption.

Underpinning these is the fact loans are not helping Kenyans. Which is the point we seek to canvass. All borrowed cash must be put into proper use and fully accounted for. Beyond the grand budgetary plans, there has to be a strict execution plan, complete with checks.

Given that this year’s Budget is coming in the context of an economic recession brought about by Covid-19 pandemic and which has necessitated increased borrowing, Treasury must exercise strict control of funds and graft cases dealt with ruthlessly.