HTTP 200 OK
Allow: GET, PUT, PATCH, DELETE, HEAD, OPTIONS
Content-Type: application/json
Vary: Accept
{
"id": 1503172,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1503172/?format=api",
"text_counter": 412,
"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kuria Kimani",
"speaker": null,
"content": "We conducted public participation across the six counties and received several memoranda. Kenyans told us they were concerned that this Bill would give the Executive a blank cheque for borrowing. For sure, from the initial drafting of the Bill, that was what would have happened. The Bill says that five years from the enactment of this Bill, the Cabinet Secretary will be required to adhere to debt levels that do not exceed 55 per cent, plus or minus 5, of GDP in net present terms and report to this House. A further clause states that it will come into effect after five years. Essentially, it means we would have given the National Treasury 10 years of the time that they would need to come and report to this House or adhere to a debt level that is 55 per cent of GDP in present value terms. Therefore, we will propose amendments to this Bill so that we do not give the National Treasury a blank cheque on this borrowing. Kenyans said they are concerned about the borrowing that can cripple the economy and increase an unnecessary burden to future generations. They want our debt to be checked. In addition to the already existing debt, pending bills should be accounted for as debt. We have a cash crunch in the country, and many Kenyans do not have money in their pockets. This is because some of the developments we enjoy, including the schools, roads and hospitals built, are financed by private Kenyans' money— the contractors who have not been paid. The verified pending bills now are in excess of Ksh500 billion, and there are others in counties. If this money is released back into the economy, we will see a better flow of money, and Kenyans will have money in their pockets. People might say that this is not true because the big boys who make contracts with the Government are the ones who will be paid. But remember, the contractors have employees who have not been paid. They have not paid rent. These employees also support their families. When this money is not paid, we then get that cash crunch in the economy. Let me speak a little about the change. This honourable House passed the debt ceiling from nominal terms, where the debt ceiling was moved from Ksh6 trillion to Ksh11 trillion. Three years ago, this honourable House changed that to not only nominal terms, but also that debt to be a percentage of GDP in present value terms. This means that when calculating our loan liabilities, you will have to discount that for inflation. That discounting is very important. It shows that for you to adhere to the 55 per cent threshold, the borrowed money must come to the economy. We are not only measuring debt but also its effect on GDP. So, where that debt does not lead to GDP growth, you will consequently see a rise in the percentage, which will be against this law. This Bill also proposes changing our accounting system from accrual accounting to cash accrual. But many people are asking what cash accruals are. A very easy example of cash accounting is recording your expenses and liabilities after paying. This transaction is cash- based. This method is used by small institutions or businesses because they are purely cash businesses. Someone who operates a kiosk in Molo on a cash basis will have the supplier bring the stock, pay in cash, and record that as purchases. People will buy and pay in cash, which is recorded as sales. Therefore, the person can easily calculate their profit, sales and purchases. This is cash accounting. Accrual accounting is done by a bigger entity that gets supplies on credit and sometimes sells on credit. Accrual accounting will recognise the goods supplied even before they are paid for. It will also account for when those items are sold. Therefore, if a big business cannot operate under cash accounting, why is our country operating on cash accounting? That is why we have pending bills. This is because we rely on the Exchequer sent to the Government entity which has procured. At the end of the year, that money has to be budgeted and accounted for again. That is why sometimes we have no record of how many pending bills we have. Accrual accounting also takes note of all assets and liabilities. This is something that is not done in cash accounting. If you ask how many motor vehicles, land or assets in terms of buildings the Government of Kenya owns, this information is not available because of the cash"
}