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{
"id": 509240,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/509240/?format=api",
"text_counter": 323,
"type": "speech",
"speaker_name": "Hon. Lati",
"speaker_title": "",
"speaker": {
"id": 2762,
"legal_name": "Jonathan Lelelit Lati",
"slug": "jonathan-lelelit-lati"
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"content": "country; you would not deny our country an opportunity to borrow for important areas as capital expenditure. The only borrowing that is bad is one that goes into consumption. What we are discussing here is basically a ceiling. Assume you walk into a bank and get a credit card, it is the limit of the expenditure on that credit card that we are discussing here. In fact, it is even better than that because for every extra expenditure, even with that limit, the Government still has to come here to ask for approval of any extra expenditure. So, this is so controlled. Having said that, it is very important to note that this is a very special and important time in the history of our country. For the first time, we have borrowed through a Sovereign Bond. There are things that come with that borrowing. For the first time, we are exposed to the whims of the free market world. This means that we have to be careful with the kind of borrowing. We have to manage our credit, otherwise it will be downgraded. Looking at where we are as a country, we are doing very well. We only need to make sure that this money goes into capital expenditure. With a debt to GDP ratio of 50 plus, it is very small. Since 1981, Japan has had a debt to GDP ratio of more than 180 per cent. Today, it is over 200 per cent and there are reasons why they are doing that. There is a strong saving culture in Japan and the Government has to borrow, so that the money does not move out of the country. This is a noble initiative for our country having in mind the Standard Gauge Railway and the LAPSSET. However, I want to caution the Government that as we go to these ceilings, which are needed and noble, we need to make sure that we obey the provisions of Article 201(c) of the Constitution of Kenya. When you take a debt, there are several ways in which you can finance that debt. One way is to raise taxes and the other one is to expand the economy. The other way that is not desirable is to default or monetize, meaning printing money. The best countries go for the first two ways. You either expand your economy, so that you can have a bigger tax base or do a budget surplus. I am hoping that after we take this debt of the SGR and the LAPSSET, our people in the Government will be reasonable enough to realize that we just do not need a balanced Budget, because it will not help. We need a surplus Budget, so that we can remain with some money to pay these debts. Surplus budgets are possible. If you look at Germany today, it has run surplus budgets for the last ten years consequently. If that is not possible, I am hoping that the money that we will pump into the LAPSSET and the other infrastructural projects will do something to expand our economy, so that we can expand our tax base. Looking at what we have at hand today, things are not very good for our country. If you look at the kind of expending that we have, about 50 per cent of our tax revenue goes into paying public workers. Looking at the Development to Recurrent Expenditure ratio, it is about 70 to 30 per cent. Those are the things that we need to take care of. As we head to a budget surplus, which we really need as we take this debt, there are also things that are not good. Moody’s, which is one of the best rating agencies in the world, is putting our Budget deficit in future at 9 per cent, which is not good. Considering things around home, there is a recommendation by the East African Monetary Union that we 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."
}