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{
    "id": 778110,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/778110/?format=api",
    "text_counter": 189,
    "type": "speech",
    "speaker_name": "Hon. Ichung’wah",
    "speaker_title": "",
    "speaker": {
        "id": 1835,
        "legal_name": "Anthony Kimani Ichung'Wah",
        "slug": "anthony-kimani-ichungwah"
    },
    "content": "inflation outlook of the country is not very promising, as there are risks associated with rising fuel prices as we even witnessed in the recent past which may lead to higher transportation cost as well as rising cost of electricity associated with increasing use of expensive thermal power as a substitute for declining hydropower generation as a result of the declining rainfall levels. These risks, if they occur, will adversely affect the economic growth and macro-economic framework. Hon. Temporary Deputy Speaker, as we all know, Kenya again is facing significant pressure from the Budget deficit and debt accumulation. Existing expenditure pressures have made it very difficult for Government to pursue any concrete steps towards fiscal consolidation. Unless we keep our expenditure in check, the fiscal deficit may worsen in the medium-term. It should be noted also that the Government’s appetite for borrowing is increasingly reducing access to credit by the private sector. I wish to underline the fact that borrowing in itself is not bad at all but how we use the borrowed resources is what matters. If borrowing is not towards creating new assets, then that borrowing is not useful to our economy or even to us as individuals. Even for individuals, if you borrow and you are not creating new assets from the borrowing then, that borrowing does not help you. However, there is nothing bad with borrowing so long as that borrowing goes to the right use. Hon. Temporary Deputy Speaker, importantly, at any one point in time, our total capital spending must exceed our net borrowing, both domestic and foreign rather than external and internal borrowing. This therefore, calls for a cautious approach to borrowing so that the Government can achieve its policy on promoting private sector-led growth. In addition, the Committee has taken note of the emerging influx of the monetary policy due to the interest rate capping law that was passed by this House about a year ago or so. It is therefore, our considered view as a Committee that the interest rate capping law can be reviewed and modified in a way that addresses the negative outcomes, particularly with regard to its impact on monetary policy. Hon. Temporary Deputy Speaker, it is fair to mention here because I have seen even the promoter of this Bill, Hon. Jude Njomo was in this House, that we are not just calling for a complete review of the interest capping law but we are saying there is an opportunity. Indeed, there is a case to review this law but in a measured way such that we are able to balance the profit motive of the industry in terms of those who are in the banking industry, the public interest and also balance and give an opportunity to our Central Bank of Kenya (CBK) as the regulator of the monetary policy to be able to have that flexibility to regulate our monetary policy. Though these risks to economic outlook are highlighted in the comprehensive report, they have not been excessively assessed and the likely impact has not been quantified and there is no plan of action should these risks materialise. It is important for this to be adequately assessed so that the macro- economic framework is as realistic as possible and any contingency plans, particularly with regard to drought expenditures are put in place to avert a crisis should there be drought in the course of the term. Taking all these factors into account, the Committee is concerned that the National Treasury growth projections may not be achieved if the risks that were identified in the BPS materialise. The implication of this is that revenue performance is likely to be lower than expected. This is likely to lead to the usual end year revision of expenditure through supplementary budgets which invariably leads to a disconnect between the planned and approved policies of the BPS and the Budget Estimates that are approved and implemented. More often than not, the implication of the Supplementary Budget is that policies are not followed through and expenditures particularly on development tend to be reduced leading to delays in completion The electronic version of the Official Hansard Report is for information purposes only. Acertified version of this Report can be obtained from the Hansard Editor."
}