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Ideas & Debate

Current Parliament has failed to watchdog National Treasury



MPs in session. FILE PHOTO | NMG
MPs in session. FILE PHOTO | NMG 

A school of piranha. That’s the best description, for lack of better words, that I can give to the current Parliament. Its conduct over the past five years, especially on crucial legislations that touch on the country’s fiscal health, can only be likened to the arrival of a lamb chop to a school of flesh-eating piranha.

The instant the lamb chop hits the water, there is turmoil as the fish devour the meat. Very soon the meat is gone leaving only the worthless bone behind, and the water returns to normal.

A very deceptive normalcy, on the surface of it. Parliament has failed in its duty as the fiscus police and has repeatedly crumbled in the face of an Executive eager to force its hands into the fiscus.

The current public finance management law hands Parliament sweeping mandate to oversight the national government on how it raises and spends its income, (which to a very large extent is made up of taxes).

Specifically, Section 39(3) of the Public Finance Management Act of 2012 creates room for National Assembly to amend budget estimates of the national government to ensure that (i) an increase in expenditure in a proposed appropriation is balanced by a reduction in expenditure in another proposed appropriation; or (ii) a proposed reduction in expenditure is used to reduce the deficit.

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Essentially, the National Assembly has the constitutional room to balance the country’s budgets, which even entails taking the National Treasury to task on its estimates.

Consider the fiscal year 2019/2020 budget estimates. The National Treasury presented expenditure estimates amounting to Sh2.8 trillion against revenue estimates of Sh2 trillion, a revenue figure which in itself appears overly ambitious given an anaemic macroeconomic environment and a very narrow tax base.

Data from the National Treasury shows that in the preceding fiscal year 2018/19, the national government missed its revenue collection target by a whopping sh123 billion and realised Sh1.67 trillion in revenues, which represented a 10 percent year-on-year growth.

That notwithstanding, the national assembly approved estimates with a gaping deficit of nearly Sh800 billion to be financed by borrowings in a clear contempt of its budget balancing mandate.

But Parliament’s capture has been displayed picturesquely when it comes to the country’s deficit-financing borrowing activities.

At a time when the country is spending more than half of its ordinary revenues to service debt obligations, the bicameral Parliament statutises a proposal from the National Treasury to set a nominal debt ceiling figure of Sh9 trillion (deleting the previous ceiling, which was pegged at the ratio of 50 percent of annual economic output-otherwise known as gross domestic product), which is almost the equivalent of the country’s current annual economic output.

This they did without even parsing the impacts of a nominal debt ceiling as well as the country’s debt capacity. That a significant amount of Kenya’s fiscal resources is being rolled towards debt service is the height of public finance disorder (PFD) and any upright Parliament cannot sign off on such estimates.

Indeed, when it comes to fiscal aggression, such as what we are witnessing now, Parliament is the only institution that has the mandate to instill the discipline required to restore public finances.

But in a classical legislative capture game, it appears the Executive has succeeded in dropping lamb chops to the school, who in turn respond in a ravenous style. As Kenya’s public finances continue to deteriorate, the country is rolling straight into a iceberg (and could turn out to be modern day Titanic story). However, in the citizenry’s continuous failure to exercise civic competence, we, as Kenyans, are also co-authors of this Titanic story.

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