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"id": 224934,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/224934/?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. Temporary Deputy Speaker, Sir, I beg to reply. Let me start by thanking the hon. Members for their contribution and all the good words that have been said not just on Treasury, but the wider reforms and activities that the Government is undertaking. May I also, from the very outset, confirm to this House that I have utmost respect for institutions, including this House. I was a bit taken aback when my colleague and friend, hon. Muite, seemed to give the impression that I do not respect the decisions of this House. I think we will discuss that in a different forum. But I wish to just confirm that I respect institutions and this House more than many others. Mr. Temporary Deputy Speaker, Sir, I wish to clarify a few issues that hon. Members raised, as the rest was covered in my comprehensive statement, while moving the Motion, in terms of explanation. Hon. Maore did mention that we are emphasizing a lot on the Recurrent Vote. Mr. Temporary Deputy Speaker, Sir, as I had explained earlier, the extra amount that we require is driven by the needs as I articulated them. Our drive is in moving expenditure from recurrent to development, and as at this point, we have moved from where we were five years ago when we were spending just about ten per cent on development to where we are spending about 23 per cent of our total Budget on development. This is a trend that we intend to continue with because we believe that development is more important that consumption. Mr. Temporary Deputy Speaker, Sir, I also want to confirm that inflation is now within the single digit figures, both the headline inflation as well as the core inflation. Because of the good rains and harvest, inflation figures are now less than 8 per cent at the headline level. In fact, some estimates for this month will be putting it at about 6 per cent on the overall inflation. That is very good news in terms of the response of the economy to what is happening. We appreciate that 874 PARLIAMENTARY DEBATES April 24, 2007 higher producer prices being paid to maize and milk farmers will, obviously, translate into higher prices at the consumer level. But those are things that we need to look at within a bigger picture in terms of higher incomes and see how they mitigate into the longer term. Mr. Temporary Deputy Speaker, Sir, I am very encouraged to hear hon. Members agreeing that the economy is actually growing, and the effects are visible everywhere. I believe that every hon. Member has been part of this development through the Constituencies Development Fund (CDF), through mobilizing monies at the local level and all those projects that are going on. Some of the comments that were coming here is evidence that hon. Members have actually been monitoring the roads that have been promised and the power and water projects in the rural areas. So long as we continue doing it collectively, then we will remove the wastage that is visible. Mr. Temporary Deputy Speaker, Sir, I also want to just mention something on the fact that we had not factored in the monies that were due on the Anglo Leasing type of contracts. We took a decision, as a Government, supported by this House through the Public Accounts Committee and the Report that was laid on the Table here, that we should not pay for those contracts until a comprehensive review is carried out to determine which ones are payable and for what purposes and which contract was valid? That is the situation we are taking forward. We looked through the promissory notes and as much as they appear in the contract as irrevocable, from our own investigations, we know that promissory notes may have been shown in the contract but some were not issued. Those that were issued were actually returned and cancelled. So, we are not exposed as a country from that perspective. There are cases, arbitrations and evaluations that are on going in court and hon. Members will appreciate if I do not comment any further. But that is the reason why we have not factored in any payments on those promissory notes because we do not believe that, at this point, we have any evidence to support how much is payable and for what purposes. Mr. Temporary Deputy Speaker, Sir, I also want to revisit the issue of KenGen, Kenya Power and Lighting Company Ltd (KPLC) and the subsidy. The Minister for Energy explained this issue and for avoidance of doubt, we committed ourselves in December, 2005, through the legal process involving the KPLC, KenGen and the Electricity Regulatory Board (ERB) and they signed a power purchase agreement that said power will be purchased at Kshs2.36 from 1st July, 2006. That is a legally binding agreement and it is in accordance with the law. When we looked at the economy and the way it was working and booming, we said that we, as a Government, do not want that amount to be passed on to the consumers. Looking at it from a perspective of responsibility in order to save the industry, our consumers and to ensure that our producers remain competitive, we decided we would rather absorb that cost ourselves as a Government rather than pass it on to the consumers. It has nothing to do with the shareholders of KenGen or the KPLC. The contract had been agreed on in 2005, and basically what we are saying is that, do not pass this cost to the consumer. Let us, as a Government, absorb that cost. Then, when the tariff studies are out and we agree on what should be passed on to the consumer, which is something which will be agreed on, including by the consumers themselves, then the consumer will pay whatever needs to be paid or get a discount."
}