Budget office cautions against extravagance

By JACKSON OKOTH

The high number of job vacancies in counties is likely to put pressure on an already overstretched wage bill, the Parliamentary Budget Office has warned.

The situation is aggravated by the growing tension between some counties and the national government as the devolved units advertise civil service jobs that are already occupied.

These observations are contained in the Monthly Bulletin on Indicators on Budget and Economy, August 2013, released by the parliamentary office.

The brief, which provides a summary of key economic and budget developments, is intended to keep stakeholders, especially legislators, updated on the latest trends in the economy.

The bulletin mentions that June and July were dominated by the county budget-making process, which has been marred with controversy amid allegations of extravagance in expenditure.

The signing of the County Allocation of Revenue Bill into law transferred Sh210 billion to the 47 counties to be shared out based on a formula approved by Parliament, but county chiefs are pushing for more resources.

Debate also raged on whether the transfer of county functions should be done all at once or in a phased manner.

Inflation

This bulletin also mentions that since the beginning of the year, Kenya has enjoyed a fairly stable inflation rate within the government target of 5 per cent.

But it warns that the current high fuel prices are likely to affect inflation rates due to increased transport costs of food and essential commodities.

“There is need, therefore, for the government to adopt strategies to rein in inflation in order to reduce the cost of living for Kenyans. This includes diversifying sources of petroleum products as well as measures to reduce dependency on oil,” the bulletin notes.

It also tackles the shilling’s depreciation against major currencies, saying this can be attributed to fiscal consolidation in major world economies, global economic uncertainties, especially with regard to oil prices and fiscal transitions of governments from one financial year to the next.

The depreciation of the shilling led to an increase in the value of export goods, with tea and coffee increasing by 21.6 per cent and 29.5 per cent, respectively, while imports recorded an overall decline of about 4.2 per cent.

In July, the shilling appreciated against some major currencies to exchange at Sh131.51 and Sh86.8 against the British pound and Japanese yen, respectively.

This was attributed to normalcy returning after the end of a financial cycle, and increasing confidence in the instruments of the new system of government among some players.