ICPAK roots for alternative sources in financing budget gap

Henry Rotich, CS Treasury before presenting 2017/18 budget to Parliament (PHOTO: FILE)

NAIROBI, KENYA: The Institute of Certified Public Accountants is urging national policy makers to turn to alternatives in funding the gap in the budget to avoid soaking in debt.

Addressing the press at the 26th   Economic Symposium that was convened by ICPAK, the statutory body of accountants in the country, the lobby's Chairman Julius Mwatu said that the appetite for more debt should be trimmed.

According to Mwatu, the 2018/2019 budget policy statement reflects an expected financing gap, which would imply debt financing.

With Kenya's public debt currently at 56.6 per cent to GDP, Mwatu said that this implies that the rate of revenue growth is less than the level of borrowing.  This means that the government will use a bigger portion of what it generates in servicing the debt.

"The government therefore needs to consider alternative avenues like Public Private Partnerships to reduce the appetite for borrowing," said Mwatu.

It is expected that out of the country's total debt of Sh4.38 trillion, about Sh1 trillion will be maturing in one year.

Wading into the controversial discourse of Kenya's debt level, Ouko said that the "jury is out there" with one group convinced that there is no reason for alarm while another calls for cautious debt expansion.

"The last group is raising alarm to the extent of saying that we have already passed the critical point. My view is that as professionals, let us interrogate the numbers and raise our voices of reason about our debt," said Ouko.

ICPAK is calling on government to arrest the menace of corruption that is threatening the development agenda. According to Mwatu, while it makes sense for any government to borrow to finance development projects, accountability is critical for the borrowing to be sustainable.

Achievement of President Uhuru Kenyatta's "Big Four" Plan, Mwatu said, will require prudent management of the available public resources.

"As such, the Government should strengthen expenditure control and improve the efficiency of public spending through public financial management reforms aimed at enhancing transparency and accountability to provide fiscal space for financing priority projects," said Mwatu.