NAIROBI: Kenya could borrow more internationally as it seeks to bridge the Sh700 billion deficit in the 2015/2016 budget set to be read in Parliament on Thursday.
PKF Kenya Partner Michael Mburugu says the government must put up measures that will see the money used appropriately and not mishandled.
Other ways the government plans to finance the deficit includes grants, project grants and debt swap, project loans, commercial financing, program support domestic deposits and domestic borrowing. The government hopes to raise Sh1.43 trillion in revenue from the exchequer in the Sh2.1 trillion budget.
Among the major gainers in the proposed budget include Sh25billion for security modernization Sh6 billion for tourism recover programmes, Sh63.5billion for roads construction, Sh144 billion for the Standard Gauge Railway, Sh55.2 billion to energy, Sh14 billion for irrigation infrastructure and Sh25 billion for NYS re-engineering.
Mburugu however urged to government to reduce domestic borrowing in a bid to give the private sector adequate money to borrow.
He also proposed an introduction of value for money audit for the public sector geared at examining the economy efficiency and effectiveness. He said this will help in weeding out corruption in the government.
“There is urgent need for parliament to amend the Penal Code and the Economic Crimes Law to impose stringent sanctions and penalties including death sentence and life imprisonment so as to combat corruption in the public sector,” he said
He also proposed that the government considers outsourcing some of the Auditor General’s functions to the private sector.
“We would also urge the government to modernise the income tax laws that includes the reintroduction of capital gains tax to widen the tax base and raise additional financing to fund devolution, however the law that was reintroduced of capital gains is a cut and paste version of the 1985 suspended law, there is need to review these regulations to reflect the current economic realities,” he said.
Last year, the country received Sh67 billion from international investors after reopening of the Eurobond it issued in June 2014.
Treasury Cabinet Secretary Henry Rotich said the country re-opened the sovereign bond seeking to raise the cash ($750 million) from international investors.
Rotich said the issue compromised a bond for Sh22.2 billion ($250 million) with a five year maturity at an interest rate of five percent and another for Sh45.1 billion ($500 million) with another 10 year maturity at an interest rate of 5.9 percent.
