State under pressure over debt and borrowing framework policy

The Civil Society Organisations now want The National Treasury to re-open the development of the proposed debt policy and management framework for meaningful public participation.

Wanjiru Gikonyo Executive Director, the Institute for Social Accountability noted that the policy does not represent citizen views as enshrined in Constitution Article 10 and 201 and the Public Financial Management Act of 2012.

According to the CSOs, the policy released last week by the National Treasury “does not capture the current context of public debt in Kenya… yet the country is implementing ever-increasing budget deficits, thereby worsening debt sustainability amid revenue shortfalls and expanding government expenditures.”

The organisations criticised the debt policy for failing to provide the context of debt and to address the measures of government plans to employ to reduce debt. ‘….that policy is meaningless unless it is tabled with a strategy to show how the government plans to reduce debt without hurting the small businesses and the ordinary tax payer….’
Civil Society raised concern that instead of instituting budget cutbacks, Treasury is increasing indirect taxes, which inordinately affects the ordinary taxpayer. Civil society termed the proposed tax increases as an economic crime against the poor people and demanded government cut wasteful projects and expenditure and corruption to plug the budget deficit.

The public debt currently stands at Sh6.2 trillion (64 per cent of GDP). However, the policy fails to provide debt indicators to discipline the Treasury despite calls by civil society to do so ‘… we can only surmise that the government is not ready to tell Kenyans the real extent of public debt…’ according to Gikonyo.

Besides, CSOs asked the International Monetary Fund to involve citizens and CSOs in the discussions on a new precautionary Stand-By Arrangement (SBA) and undertake Article IV consultations to ensure transparency and representation of public views.

They have proposed the establishment of a National Consultative Forum to provide for structured public participation and oversight over the process.

‘Failure to adhere to this is against the principle of public participation in public finance as envisaged in the Constitution of Kenya Article 201 (a),” Gikonyo stated on behalf of the CSO.