Kenya's Treasury minister reveals govt can't fund projects

Treasury minister blames taxman for failure to hit collection target.

Henry Rotich, the Cabinet Secretary for the National Treasury. He has said the government has no money to finance its projects. FILE PHOTO | NATION MEDIA GROUP 

IN SUMMARY

  • Cabinet Secretary reveals plan to slash funds allocated to counties by up to $167.9m.
  • Mr Rotich blame the country’s financial situation on failure by the Kenya Revenue Authority (KRA) to hit its projected collection targets.
  • The CS say that elections slowed down business activities in the country.

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Kenya's Treasury Cabinet Secretary Henry Rotich has said that the government is facing difficulties financing some of its development projects.

While appearing before the Senate committee on Finance and Budget Wednesday, he also revealed a proposal to slash funds allocated to counties by between Ksh15 billion ($148.2m) and KSh17 billion ($167.9m).

Mr Rotich blamed the country’s financial situation on failure by the Kenya Revenue Authority (KRA) to hit its projected collection targets.

“We have discussed with the KRA on how to catch up by tightening the tax net on the domestic and customs revenue,” Mr Rotich told the Committee.

“We need to discuss with you (Senators) and governors that the figure we put on the table is not feasible based on the challenges that I have explained.”

In the current financial year, Ksh302 billion ($2.9bn). was allocated to the 47 county governments in equitable share of revenue collected, meaning that in the worst case scenario, the allocation could slashed to Ksh285 billion ($2.9bn).

Elections hit

According to the CS, the shortfall in revenue collection as projected in March last year when the budget was read early last year to pave the way for the August 8 general elections, is because of the prolonged electioneering period and biting drought.

The CS noted that these affected revenue collection as it slowed down business activity in the country.

However, Senators Mutula Kilonzo Junior (Makueni) and Ms Rose Nyamunga (nominated) questioned the move to slash counties' allocations saying it may affect ongoing projects in devolved units.

Counties are also likely to incur unnecessary expenditures in compensation costs on the ongoing projects that are likely to be affected by proposed budget cuts.

“Just tell us that the government is broke! Otherwise this thing you are telling us about reduction of the counties allocation is something that we can’t sell. It is impossible to do that midway through another budget making process,” Mr Kilonzo said.

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