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"id": 193442,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/193442/?format=api",
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"type": "speech",
"speaker_name": "Mr. Kimunya",
"speaker_title": "The Minister for Finance",
"speaker": {
"id": 174,
"legal_name": "Amos Muhinga Kimunya",
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"content": " Mr. Speaker, Sir, I beg to move that Mr. Speaker do now leave the Chair. It is once again an honour for me to stand in front of this august House to present the 2008 Budget. This is the first Budget of the Grand Coalition Government and it comes hot on the heels of the launch of the harmonised First Medium-Term Plan of the Vision 2030. Five years ago, the year 2003 ushered in political and economic optimism in our country that had not been witnessed in decades. Collectively, we began the hard task of rebuilding our then ailing economy in order to improve the living conditions of our people. We consistently implemented a package of both economic and structural reforms within the framework of the Economic Recovery Strategy, that has just ended. As hon. Members are aware, we made tremendous progress on many fronts. Economic growth accelerated from 0.5 per cent in 2002 to reach a peak of 7 per cent in 2007, and poverty index reduced sharply from 57 per cent in 2000 to 46 per cent in 2006. However, as we were preparing for the take-off stage to a higher level of development and prosperity, our nation came under a serious threat of disintegration following the disputed December, 2007, General Elections. The unfortunate events that followed were painful and threatened to reverse the economic gains we had made over the previous five years. More importantly, those events also threatened the very fabric of our nationhood and are, indeed, a costly reminder of our vulnerability. Mr. Speaker, Sir, it is, however, heartening to note that during the two long and traumatising months of the crisis Kenyans, in their diversity, remained resilient and unwavering in their demand for a return to peace and stability. This is a strong reminder of our collective determination to overcome adversity, pick up the pieces and move our country forward. The signing of the Peace Accord on 28th February, 2008, by His Excellency the President and the Right Hon. Prime Minister, ushered in a new and the much anticipated dawn for peace and stability. At this point, let me, on behalf of the Kenyan Government and all Kenyans, salute the many friends of Kenya who invested their time and resources to save our nationhood. Mr. Speaker, Sir, arising from these difficult times, we now can or very painfully comprehend our weaknesses as a nation and the challenges that we must confront as a people in order to build a solid foundation for our nation and make progress in improving the lives of our people. But more importantly, the crisis presented a historical turning point from which we have come out more focused and determined to stay on course so as to realise our collective vision of our competitive and prosperous nation; a new determination to achieve the goals and targets contained within our National Vision 2030 that was launched on Tuesday. We now fully recognise that achieving the long-lasting peace and stability will only be possible through genuine national reconciliation, social cohesion and solidarity among our people and, above all, elimination of deep poverty. Moreover, we must squarely deal with the problem of inequality in incomes and assets which has compounded the poverty problem and youth unemployment in our country. These are challenges that we need to confront jointly with all the stakeholders and Kenyans at large. Mr. Speaker, Sir, turning on to the recent economic developments, as we embark on this important journey of social economic reconstruction as well as transformation, we need to take into 1134 PARLIAMENTARY DEBATES June 12, 2008 account the global environment and its impact on our economy. Looking at the recent global developments, we know that although the world economy grew by an annual average of 5 per cent between 2003 and 2007, the expansion was associated with widening global imbalances. The recent turbulence in the USA housing market and Europe is expected to slow down economic expansion particularly in the advanced economies. Further, the continued higher oil prices have focused lower growth prospects worldwide and are, therefore, likely to weaken the demand for our exports. On the other hand, growth prospects for the emerging and developing economies are expected to continue along a robust path and remain above the long-term trend. For example, growth prospect in sub-Saharan Africa, in China and India are focused to average about 6.8 per cent, 8 per cent and 9 per cent respectively during the 2007/2008 period. These levels of growth are expected to support the demand for our exports. The continued strong growth in China and India will, however, put further upward pressure on crude oil and food prices and thus continue to cause hardship among our people. Mr. Speaker, Sir, our region is particularly experiencing stable growth which is good for our trade prospects. In order, therefore, to cushion our economy and our people from these challenges and to take advantage of the emerging opportunities, this Budget proposes various measures to expand production, create employment and improve Kenya's global competitiveness and diversify to cheaper energy sources. Turning to the domestic front, I am happy to note that we made significant progress, for the last five years, and we intend to build on these gains as we move our economy back onto a higher level of growth and development. As I said, since 2003, our economy has expanded continuously, rising from virtual stagnation in 2002 when it registered a paltry 0.5 per cent growth to 7 per cent in 2007. This is the longest continuous growth registered in our country over the past 30 years. The growth is attributed to the successful implementation of sound fiscal and monetary policies, the deepening of structural reforms, as well as targeted and progressive investment in pro-poor programmes under the Economic Recovery Strategy (ERS). Mr. Speaker, Sir, the favourable overall performance was replicated in virtually all the sectors of our economy. For instance, the growth of our manufacturing sector accelerated from 0.1 per cent in 2002 to 6.2 per cent in 2007. The wholesale and retail trade sector switched from a decline of 2.5 per cent to register a growth of 11.5 per cent over the same period. Our total exports almost doubled largely driven by strong growth in coffee, tea and horticultural exports. And supported by strong growth on remittances and capital inflows, our international reserves increased from US$1.1 billion in 2002 to US$3.6 billion by the end of 2007. For details on the economic performance under the ERS, honourable Members may wish to refer to the Budget Strategy Paper, 2008, which has already been circulated along with the other Budget documents. Mr. Speaker, Sir, despite the progress that we made on the social and economic front over the recent past, we recognised the many challenges that we continue to confront in an effort to raise the living standards of our people. Some of these challenges include, the low levels of savings and investments, the low levels of productivity in agriculture and industrial sectors, unemployment particularly among our youth, the high incidence of poverty at 46 per cent and disparities in regional development. These challenges were further exacerbated by the post- election crisis which negatively affected such sectors as agriculture, tourism, manufacturing and transport. The displacement of some Kenyans from their farms and the subsequent general insecurity and transport difficulties that were experienced during the crisis partly contributed towards the onward upward pressure on food prices. This has been further worsened by the additional inflationary pressures arising from higher international oil and food prices, all of which have diminished the purchasing power of the June 12, 2008 PARLIAMENTARY DEBATES 1135 ordinary mwananchi . Mr. Speaker, Sir, to ameliorate the suffering of our people from the high prices of food, the Government will do all in its power to contain the current inflationary pressure as a key development priority. I will be spelling out shortly, the measures that we will be implementing. This Budget, therefore, focuses on measures to address these challenges and initiates implementation of the programmes set out in our recently launched First Medium-Term Plan covering 2008 to 2012. To achieve these objectives, we must remain focused on the things required to raise long-term growth, expand employment opportunities, reduce poverty among our people and promote regional development. Accordingly, the 2008/2009 Budget focuses"
}