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{
    "id": 420229,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/420229/?format=api",
    "text_counter": 220,
    "type": "speech",
    "speaker_name": "Hon. Musyimi",
    "speaker_title": "",
    "speaker": {
        "id": 95,
        "legal_name": "Mutava Musyimi",
        "slug": "mutava-musyimi"
    },
    "content": "(v) While the discovery of mineral deposits portends significant benefits to our economy, there are risks accruing from the robust extractive industry such as negative environmental impact, macroeconomic imbalances as well as conflict among communities, the government and mining investors. As we all know, unfortunately, the threat of massive corruption becomes and remains a real possibility in the extractive sector. Hon. Temporary Deputy Speaker, with regard to inflation, according to the Budget Policy Statement, inflation is expected to stabilize at the medium term target of around 5 per cent. My Committee is concerned that inflation is likely to trend upwards owing to various factors. In fact, the BPS recognizes that supply side shocks are still a threat to price stability and notes that reserves for food, oil and foreign exchange will provide an intervention mechanism for moderating overall inflation. However, it is highly unlikely that these reserves can provide enough buffers to rein in inflation as envisaged. Already consumer goods prices have been on the increase due to VAT law. The likelihood of food shortage remains a real threat. Available evidence suggests that maize production in parts of Rift Valley and Western is likely to be below average compared to the 2012 production. The Food and Agriculture organization of the United Nation’s forecast of cereal production in Kenya for 2012 and 2013 indicates that production is actually falling. Hon. Temporary Deputy Speaker, oil reserves remain volatile; furthermore at 4.2 months of import cover, the forex reserves are still too close to the statutory four months level and the likelihood of falling below the threshold is actually quite high. With this picture in mind, maintaining inflation at 5 per cent level may be difficult to achieve. Hon. Temporary Deputy Speaker, the easing of the monetary policy stance by the Central Bank of Kenya through the reduction in the CBR rate or the base lending rates which currently stand at 8.5 per cent has led to reduction in interest rates. Commercial bank lending rates have gradually declined from 19.7 per cent in September, 2012 to 16.95 per cent in 2013, to support credit uptake by the private sector. Interest rates spread between the average lending and deposit rates decreased to 10.6 per cent in September, 2013 from 20.33 per cent in September, 2012. It is worth noting that there is projected high foreign payment over the medium term. The BPS also points out that the credit access to the private sector is increasing. However, expenditure projections indicate an increase in net domestic borrowing mainly by Government in 2014/2015 and this may reduce credit access to the private sector. With regard to the exchange rate, the Kenya Shilling rate has stabilized against the major world currencies. This has been attributed to increased short term inflows and remittances particularly from the Diaspora; disbursements under the Extended Credit The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}