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"id": 91899,
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"content": "Mr. Temporary Deputy Speaker, Sir, with regard to micro-economic stability, the strong economic performance in the period of 2003/2007 was possible through the pursuit of policies supportive of stable micro-economic conditions. Underlying inflation was broadly within the 5 per cent target while overall inflation average was 11.2 per cent over the period. Owing to the implementation of the sound fiscal and monetary policies and in close collaboration with the Central Bank of Kenya (CBK), commercial bank lending declined from over 18 per cent in 2002 to an average of about 12 per cent in 2007. Deposit rates have remained fairly stable during the period, thus leading to a narrowing of the spread between lending and deposit rates from 13.4 per cent in 2002 to 9.1 per cent in 2007. The Kenya shilling exchange rate remained fairly stable against the US dollar in 2006 and tended to appreciate in 2007 due to a strong balance of payment position as well as the weakening of US dollar against major international currencies. Mr. Temporary Deputy Speaker, Sir, it should be noted, however, that owing to the adverse impact of some extraneous factors beyond the control of the Government, the above impressive trend could not be sustained in the financial year 2008/2009. These include the post-election violence, prolonged drought occasioning the import of food, fertilizer and increased related expenses as well as the global financial crisis amongst other things. In 2009/2010 financial year, the Kenyan economy started recovering with real GDP growth of about 3.3 per cent. The economy is projected to grow by 4 to 6 per cent in 2010 and to rise to over 6.5 per cent over the medium term, especially as the benefits from the ongoing interventions in key sectors like agriculture, livestock, transport, roads, energy, information, communication and technology. Mr. Temporary Deputy Speaker, Sir, with regard to revenue mobilization, revenue collection improved significantly over the period with total revenue growing from Kshs289.8 billion in 2004/2005 to Kshs373 billion in 2006/2007, representing a growth of 28.7 per cent in nominal terms. Revenue collected continued to increase to Kshs432.2 billion during the financial year 2007/2008 and to Kshs487.9 billion in 2008/2009 and then to Kshs548 billion for 2009/2010. This is equivalent to about 22 per cent of GDP. Revenue collection is expected to be maintained at over 22 per cent of GDP during the financial year 2010/2011. Mr. Temporary Deputy Speaker, Sir, with regard to expenditure, over the period under review, total expenditure rose from Kshs303.7 billion in 2004/2005 to over Kshs600 billion in the Financial Year 2008/2009 and then to about Kshs1 trillion in the Financial Year 2010/2011. Recurrent expenditure rose from 257.7 billion in 2004/2005 to Kshs435.5 billion in the fiscal year 2008/2009 to about Kshs675 billion for the Financial Year 2010/2011. The Development Expenditure on the other hand rose from Kshs45.6 billion in the financial year 2004/2005 to Kshs163 billion in the Financial Year 2008/2009 and then to Kshs300 billion in the Financial Year 2010/2011. The increase in expenditure reflected the Government’s desire to finance pro-poor and pro-growth priority programmes and projects. Areas given priority were those which ensured increased incomes of the poor and improvement in the quality of life such as health, education, agriculture, physical infrastructure as a result of the combined share of resources directed towards these sectors which also rose from 55.9 per cent in the financial year 2004/2005 to 66.4 per cent in the financial year 2009/2010. On the overall, expenditure will be maintained at about 30 per cent of GDP over the medium term. Mr. Temporary Deputy Speaker, Sir, with regard to financing, the Government priority has been to reduce the overall fiscal deficit, including grants to 3.2 percent of"
}