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"id": 217970,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/217970/?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, to strengthen this prosecutorial capacity, initiatives are ongoing to increase the number of prosecutors, the magistrates and the judges of the High Court. Hon. Members may wish to refer to the Budget Strategy Paper of 2007 which has been circulated to hon. Members for more details on the Government's actions, especially in the areas of governance. Mr. Speaker, Sir, with the continued support so generously extended to this Government by the hon. Members, the private sector players and Kenyans at large, we have found, over the last four and a half years, the strength and inspiration to improve the lives of our fellow Kenyans and to move forward towards achieving the Millennium Development Goals (MDGs). Thankfully, successive annual achievements have motivated us to strive to continue working harder in order to lock in this success which is so necessary for building a prosperous future for all Kenyans. I am, therefore, happy to report that this Government has now completed the task of laying a solid, socio- economic foundation complete with the building blocks for our future prosperity. Mr. Speaker, Sir, in moving forward, the Government would like to further expand the opportunities available to Kenyans of all walks of life, so that they can participate in their own wealth creation, while at the same time, helping build a new and better Kenya. This is, indeed, the spirit of the National Vision 2030 whose formulation has involved consultation with many Kenyans involving some of the hon. Members and a whole broad spectrum of Kenyans both here and abroad. Like the Economic Recovery Strategy (ERS) before it, the Vision 2030 has three key pillars and these are namely: (i) The economic pillar which basically aims to achieve a high and sustained non- inflationary economic growth steadily rising to 10 per cent by the year 2012 and being maintained at that rate thereafter. (ii) A social pillar which aims at achieving a just and cohesive society enjoying equitable 1824 PARLIAMENTARY DEBATES June 14, 2007 social development within a secure and clean environment. (iii A political pillar which aims and seeks to achieve an issue-based, people-centred and an accountable democratic political system. Mr. Speaker, Sir, this Budget which straddles the period of the ERS which ends this December and the start of the Vision 2030 in January 2008, is intended to define the path to facilitate and enhance the participation of all Kenyans in helping build a strong economy and thereby help us to achieve the Vision 2030 objectives. Accordingly, the theme of this year's Budget is: \"Vision 2030 - Working Together on the Path to Prosperity.\" Mr. Speaker, Sir, let us turn to an overview of laying of this foundation. Our country is now poised for accelerated development. With this in mind, the Vision 2030, though encompassing the objectives of the ERS, is much more ambitious and requires a radical transformation of the economic, social and political systems. In laying the foundation for the economic pillar of the Vision, we must build an enabling environment for the private sector in order to fully unlock its potential and to become-globally competitive. Achieving this in the medium-term will require that we:- (i) continue to maintain a stable macro-economic environment underpinned by prudent fiscal and monetary management, supported by key structural reforms; (ii) accelerate the rehabilitation and expansion of our infrastructure and basic amenities; (iii) develop quality human capital to raise our productivity and to enhance our global competitiveness; (iv) maximise economic opportunities for all Kenyans and ensure that they continue to benefit from the fruits of high economic growth through targeted programmes to reduce inequality and poverty; and, (v) encourage growth of business through improved governance and reduction in the cost of doing business. Turning to the Medium-Term Macro-Fiscal Framework and structural reforms, the medium-term is bright, buoyed largely by consumer and investor confidence and continued strong growth in our trading partners' economies. Hon. Members may wish to refer, again, to the Budget Strategy Paper for 2007 for more details. We expect to achieve a growth rate of between 6.5 per cent to 7 per cent in 2007, which should rise gradually to 10 per cent by the year 2012 as a result of the interventions we are planning to put in place. Mr. Speaker, Sir, to achieve this level of growth, we will:- (i) continue to maintain low inflation and stable positive real interest rates to facilitate adequate expansion of credit to the private sector to support increased economic activities; (ii) increase the level of public and private sector investments by, at least, 10 percentage points of the Gross Domestic Product (GDP) over the next five years; (iii) strengthen the financial sector by enhancing its efficiency and to help mobilise the required savings to finance the additional investments; (iv) deepen the ongoing efforts to improve the investment climate through deduction in cost of doing business; (v) accelerate infrastructure development to crowd-in private investments; (vi) enhance efficiency in the financial sector; and, (vii) increase the productivity of our labour and capital. Mr. Speaker, Sir, turning briefly to the fiscal framework, we intend to implement our development programmes based on a fiscal framework which focuses on a number of things. The first one is maintaining a strong revenue effort underpinned by deepening tax administration reforms and modernisation of our tax system. June 14, 2007 PARLIAMENTARY DEBATES 1825 Secondly, we will contain the growth of our total expenditures, while creating fiscal space through expenditure rationalisation to shift resources from non-priority areas to the priority areas, including expenditure on the flagship projects critical to achieving Vision 2030. Thirdly, we will contain the growth of our domestic debt to a sustainable level to encourage expansion of credit to the private sector for faster development. Turning to the deepening of structural reforms for a competitive business environment, macro-economic stability must also be accompanied by deep structural reforms in order to maximise growth. Therefore, to consolidate the recent gains in the public sector, the Government will implement structural reforms to further improve efficiency in the use of public resources and ensure effective service delivery. We will focus on priority areas of public expenditure and financial management, public sector restructuring and privatisation, deepening of the financial intermediation and private sector competitiveness. The implementation of these measures is expected to improve business environment, encourage private sector investment, both domestic and foreign, and expand its capability to create more jobs and reduce poverty amongst our people. Mr. Speaker, Sir, on further improvements on governance for achieving Vision 2030, the Government fully recognises that accelerating and deepening the reform agenda in the areas of governance and anti-corruption is critical for accelerating economic growth and sustained reduction in poverty. Therefore, the Government has developed the \"Governance Strategy for Building a Prosperous Kenya and an Action Plan\" which sets out time bound specific and prioritised anti- corruption interventions in the broad areas of prevention, investigation and recovery of corruptly- acquired assets, strengthening the prosecutorial capacity, as well as improving the governance in priority areas. The implementation of these measures will be expected to result in measurable improvement in the fight against corruption in the short-term and medium-term. The Budget Strategy for Achieving Vision 2030, and the 2007/2008 Budget Framework that I am presenting to this august House is set against the background of medium-term macro- fiscal framework that I have just outlined. We envisage a continuation of the recent strong economic performance with real GDP expected to increase by 6.5 per cent to 7 per cent in 2007/2008, again, largely propelled by the continued strong performance across all sectors. Inflation will be expected to remain under control reflecting continued implementation of prudent fiscal and monetary policies and projected easing of food and oil prices. We also expect the gross international reserves to increase to the equivalent of 3.9 months of our projected import cover. Mr. Speaker, Sir, as in the previous year, the Government is committed to containing expenditures and re-orienting them towards growth and poverty-reducing programmes in the areas of infrastructure, health, education and other priority projects, which are expected to lay the foundation for achieving our Vision 2030. The Government further aims to maintain a stable and predictable level of domestic borrowing in order to sustain the relatively stable interest rates that we witnessed in 2006/2007 and to further boost private sector economic activities. Turning on to revenue, the 2007/2008 Budget targets revenue collection of about 21 per of our GDP. As noted earlier, this performance will be underpinned by the ongoing reforms in tax administration. The streamlining of exemptions regime in line with other East African Community partner States is also expected to protect the revenue base. Total revenues, including Appropriations-in-Aid, are projected to increase by about 14 per cent bringing the total tax collection to about Kshs428.8 billion. Mr. Speaker, Sir, revenue collection has been a major success under the Kibaki Administration. You will recall that revenue has increased from Kshs210 billion in 2002/2003 to the current level of Kshs376 billion, despite reductions in the Value Added Tax (VAT) and the duties that we had to give up mainly due to the efforts we put. I wish to thank all Kenyans for paying taxes and commend the Kenya Revenue Authority (KRA) for their dedication in revenue 1826 PARLIAMENTARY DEBATES June 14, 2007 collection."
}