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"id": 193456,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/193456/?format=api",
"text_counter": 38,
"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": " Thank you, Mr. Speaker, Sir. As I was saying, the 2008/2009 Budget focuses on the following four priority development areas of our Grand Coalition Government:- (i) restoring our economy to a higher broad-based long-term growth at par with expanded opportunities for all Kenyans; (ii) creating employment opportunities for our youth for a more stable and cohesive society; (ii) reducing poverty and inequality through accelerated regional development; and, (iv) deepening our human development efforts for higher productivity and economic prosperity. Mr. Speaker, Sir, the 2008/2009 Budget is, therefore, anchored on the premise that the cornerstone of the next phase of our development agenda is to empower Kenyans by creating employment opportunities for the youth, promoting unity of purpose and reducing regional imbalances in development. This way, every Kenyan will feel that he or she has a stake in this great nation of ours. Mr. Speaker, Sir, the Budget that I am presenting today is intended to usher in a new thinking and vision for building this nation. Therefore, hon. Members, the theme of this year's Budget is \" Working Together to Build a Cohesive, Equitable and Prosperous Kenya \". Against this background, the rest of my speech outlines the sectoral policies as well as expenditure and tax measures that we will implement in the 2008/2009 Financial Year in order to achieve the above mentioned priorities, starting with restoring our economy to a higher and sustained broad-based economic growth. Mr. Speaker, Sir, the Grand Coalition Government is committed to restoring the economy back onto a higher growth path consistent with our Medium-Term Plan and the Budget Strategy Paper, which are derived from the National Vision 2030. Mr. Speaker, Sir, the Vision is based on three pillars: The economic pillar, which aims at accelerating the annual real GDP growth to 10 per cent by the year 2012 and thereafter sustaining it at this level with a view to making Kenya an upper-middle income country by the year 2030; the social pillar, which aims at achieving a cohesive society enjoying equitable social development, and the political pillar, which aims at building a democratic, issue-based and accountable democratic political system in our country. The bottom line in all this is a higher quality of life for our people. We expect the impact on the adversely-affected key sectors of our economy to be short- lived. We have peace and stability. The recent over-subscription of the Safaricom shares IPO attests to the fact that investor confidence, both domestic and foreign, has, indeed, rebounded. We initially anticipated growth for 2008/2009 at 7 per cent to 8 per cent, but we now expect the real GDP to expand by between 4.5 per cent and 6 per cent in 2008/2009 and by 7 per cent to 8 per cent in 2009/2010 before progressively rising to 10 per cent by the year 2012/2013. This will require us to boost investment to drive long-term growth, which will further depend on increasing our savings June 12, 2008 PARLIAMENTARY DEBATES 1137 and expanding exports. To achieve this level of growth, I will be proposing several measures under the following sub-headings:- (i) Sustaining micro-economic stability and strengthening the financial sector to ensure low, but stable interest rates, a low rate of inflation and stable currency in order to foster rapid and sustainable growth and jobs creation. (ii) Expanding our infrastructure capacity to enhance regional and global competitiveness and facilitate investment and growth. (iii) Improving the business environment by reducing the cost of doing business. (iv) The fourth one is ensuring an efficient and effective public sector and improving on governance. (v) promoting industrial research, technology and innovation for higher productivity and expanded employment opportunities. Mr. Speaker, Sir, this year's Budget is by far the most difficult one since I became the Minister for Finance in early 2006. This Budget has to address many objectives, including the following:- (i) designing an economic recovery programme to address the down-turn of the economy following the post-election crisis; (ii) addressing the humanitarian crisis that followed the disputed elections, including the re- settling of the Internally Displaced Persons (IDPs); (iii) Laying the foundation for returning to a higher growth path consistent with achieving the Vision 2030 growth target of 10 per cent by the 2012/2013 Financial Year. This requires increased spending to fill the infrastructure gap and provide funding for the Vision 2030 flagship projects. (iv) providing relief to our farmers and strengthening the capacity of the National Cereals and Produce Board (NCPB) to play a more effective role in stabilizing food prices; (v) Providing for the Free Primary Education and the Free Secondary Education Programmes while ensuring that spending on health is not adversely affected. (vi) Addressing the issue of unemployment, especially of our youth. (vii) Dealing with the important issue of regional inequality. Mr. Speaker, Sir, dealing with these issues under normal circumstances is difficult enough, but dealing with them when the revenue base has been eroded is an arduous task. These are challenges that, if not handled carefully, could upset our macro-economic framework. Hon. Members will appreciate that raising taxes under the current inflationary environment, when taxpayers are already facing high prices of consumer goods and cannot afford a further reduction in their disposable income, is the least desirable option. Similarly, a substantial increase in Government borrowing risks raising interest rates, thus jeopardising the fragile recovery of the private sector which, after all, is the key to creating the jobs we need for our youth. Moreover, our debts service payments are already quite high and further increases would only result in crowding-out priority expenditure in the economic and social sectors. In addition, and in consistence with our financial independence strategy, we, as a nation, have not factored in un-committed Budget support from our development partners. Given these resource constraints, we have had to prioritise our expenditure to ensure that only key programmes and projects, which are consistent with our policy objectives, are funded. Mr. Speaker, Sir, on balance, I believe that this Budget has managed to address the key issues and challenges currently facing the economy. It will deal with both the short-term and medium-term needs of our economy in a way that supports a move to a more rapid and sustainable growth path as soon as possible, but within the context of a stable macro-economic environment. This Budget, therefore, lays a firm foundation for achieving macro-economic stability, which is a 1138 PARLIAMENTARY DEBATES June 12, 2008 pre-requisite for sustainable growth, employment creation and poverty reduction. Mr. Speaker, Sir, to allow sufficient credit expansion to finance increased private sector activities, the Government will continue to contain the growth of its debts at a level that will not lead to unsustainable spiral of debts accumulation. On the monetary side, the Central Bank of Kenya will pursue an appropriate monetary policy stance aimed at achieving a low rate of inflation. Mr. Speaker, Sir, despite some external factors beyond our control - such as persistent high global fuel and food prices - undermining our efforts to contain inflation, we are determined within our means to address all supply bottlenecks in the agricultural and energy sectors, which have exacerbated the problem. I will shortly outline measures to deal with the high food and fuel prices."
}