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{
    "id": 879235,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/879235/?format=api",
    "text_counter": 416,
    "type": "speech",
    "speaker_name": "Kikuyu, JP",
    "speaker_title": "Hon. Kimani Ichung'wah",
    "speaker": {
        "id": 1835,
        "legal_name": "Anthony Kimani Ichung'Wah",
        "slug": "anthony-kimani-ichungwah"
    },
    "content": "On the vertical division of revenue for 2019/2020, in the 2019 BPS, the total sharable revenue is projected at about Kshs1877.18 billion out of which Kshs1561.42 billion will be allocated equitably to the national Government and Kshs310 billion as an equitable share to the county governments. In addition, the total conditional grants allocation to counties is Kshs61.6 billion of which Kshs38.71 billion is from development partners. This should be from the World Bank Urban Support Programme. This brings the total proposed allocation to counties for the Financial Year 2019/2020 to Kshs371.6 billion relative to the 2018/2019 total of Kshs376.4 billion. Hon. Temporary Deputy Speaker, we shall soon be publishing an amendment to the Division of Revenue Act 2018 seeking to share in the austerity measures that we had in the national Government, under Supplementary Budget I, for our county governments. In that amendment, we also seek to be amending a particular section of the Division of Revenue Act that stipulated that any shortfalls in revenue will be borne by the national Government. This will enable sharing on pro-rata basis, any shortfalls in revenue between the national Government and the county governments. I will move to the Medium Term Debt Management Strategy (MTDS) for 2019/2020, which proposes a borrowing framework of 38 per cent, external borrowing, and 62 per cent domestic borrowing, to finance the national budget deficit. External debt will be financed through concessionary finance to the tune of about 26 per cent, semi concessional finance at 8 per cent and commercial finance at 4 per cent. The Committee has reviewed the MTDS and makes the following observations: 1. The country is facing significant debt refinancing pressure; 2. There is a variation between the deficit financing, as indicated under the BPS and the MTDS. Therefore, you would note from the BPS, it proposes to finance the deficit through external financing to domestic at the ratio of 47 per cent to 53 per cent and the MTDS utilises the ratio of 62 per cent of external financing and 38 per cent for internal financing. 3. Commercial debt is set to continue to grow as a result of the deviations in the MTDS deficit management structure. The MTDS indicates that commercial debt should only make up 4 per cent or about Kshs12.26 billion total external borrowing whereas the BPS’ target is set at 47 per cent, which is about Kshs207.8 billion. 4. The current PFM regulations place Net Present Value of debt to GDP limit of 50 per cent. This has been breached by 9.9 per cent and is set to remain so for the rest of the medium term. Other ratios that have breached their thresholds include debt service to revenue ratio and debt service to export ratio. Hon. Temporary Deputy Speaker, it is instructive to note because the issue of debt has been a very touchy subject in this country, that we have expressed our concern to the National Treasury that our debt serviceability ratios are not very promising in terms of how much money we raise in terms of revenue and how much of that revenue will repay our debts. We have implored upon the National Treasury to ensure that we are able to enforce our fiscal consolidation to an extent where we do not have a very huge fiscal deficit. It should be financed through borrowing or to significantly push KRA to deliver on increased revenues. That is why we are emphatic that any additional revenues should not go towards additional expenditure. Any additional revenues that KRA will generate should go towards reducing our fiscal deficit and, therefore, reducing the amount of borrowing that we are doing. 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."
}