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{
    "id": 1439425,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1439425/?format=api",
    "text_counter": 735,
    "type": "speech",
    "speaker_name": "Balambala, JP",
    "speaker_title": "Hon. Abdi Shurie",
    "speaker": {
        "id": 13294,
        "legal_name": "Abdi Omar Shurie",
        "slug": "abdi-omar-shurie-2"
    },
    "content": "In general, the CFS expenditures, therefore, constitute the largest expenditure component of the national Government spending. It underscores the necessity to strengthen the National Assembly's oversight capacity over these expenditures to ensure transparency and accountability. Furthermore, it also highlights the ongoing fiscal challenges confronting the nation, stressing the importance of designing and implementing strategies to lower these expenses. Therefore, maintaining fiscal discipline, adhering to the fiscal consolidated trajectory, and freeing up fiscal space for key development investment has never been more crucial. These steps should aim to stimulate sustainable economic growth rates exceeding 10 per cent. The Committee noted a projected improvement in the fiscal deficit between the Financial Year 2023/2024 to Financial Year 2024/2025, from 5.6 per cent of Gross Domestic Product (GDP) to 2.9 per cent. Achieving a lower deficit to GDP ratio is vital for sustaining fiscal health, thus ensuring economic stability, attracting investment, and securing better economic prospects for subsequent generations. Despite this positive outlook, it is vital to remain realistic and diligently pursue this target, even if it requires rigorous fiscal discipline. In this context, reducing expenditure on public debt service is essential. These expenditures, which on average constitute 88 per cent of CFS expenditures, indicate an escalation in largely non-productive expenditures, causing liquidity constraints and increasing vulnerability to macroeconomic shocks. Total debt service expenditures are projected to reach Ksh1.8 trillion in the Financial Year 2023/2024, and Ksh1.85 trillion in the Financial Year 2024/2025, underscoring the increasing inflexibility of our fiscal structure. This is illustrated by the interest expenditures for the Financial Year 2024/2025, which are anticipated to be Ksh1.01 trillion, equivalent to 5.6 per cent of our GDP. Tackling this challenge is essential for boosting budget flexibility and enhancing liquidity. Beyond fiscal management, effective management of the macroeconomic factors is crucial. The Committee observed that the depreciation of the Kenya Shilling against the US dollar in the Financial Year 2023/2024 led to an increase of up to Ksh1.2 trillion in external debt stock and over Ksh300 billion increase in external debt service expenditure. Although this was mitigated by the subsequent appreciation of the Kenya Shilling, it highlights the significant cost of implications of some macroeconomic policies. Going forward, fiscal and monetary policies should operate synergistically to mitigate the financial burden of external debt and reduce interest costs. A thorough review of the debt operations under CFS expenditures is also warranted. In the Financial Year 2023/2024, the National Treasury became the primary debtor for the debt owed by Kenya Airways Plc. According to Supplementary Estimates II, the guaranteed debt of Kenya Airways Plc was integrated into the main external public debt stock for the Financial Year 2023/2024. The interest and the principal payment for this new loan are projected to be Ksh14.3 billion in the Financial Year 2023/2024 and Ksh20.9 billion in Financial Year 2024/2025 with further payments of Ksh21.3 billion and Ksh10.7 billion expected in the Financial Year 2025/2026 and Financial Year 2026/2027 respectively. The Committee noted that this resulted in additional financial commitments without corresponding assets, thereby increasing the financial burden. We would like to emphasise that just because these expenditures are a direct charge to the Consolidated Fund and do not require appropriation, they are not exempted from oversight by the National Assembly. There is an overall necessity to establish laws, protocols, and standards to oversee CFS expenditures, given that they currently represent the most substantial Government outlays and are expected to maintain this status in the foreseeable future. The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}