Government to blame for high cost of living, economists say

Controller of Budget Dr Margaret Nyakang'o (left) at Bomas of Kenya before the National Dialogue Committee. [David Gichuru, Standard]

Economic experts have blamed unnecessary government expenditure, exaggerated budgeting and integrity issues as causes of the prevailing economic crisis fueling inflation, increased taxes and high cost of living.

Speaking yesterday at Bomas of Kenya before the National Dialogue Committee, Controller of Budget Dr Margaret Nyakang'o, said many of the loans taken by the government including those in 2022, had ambiguous definitions.

She added that the National Treasury could not provide a clear account of projects to which loans were allocated. "I have been approving payments for public debt and I have seen many of those things cannot be identified. You cannot tell what the money was meant for and therefore there was no economic gain from that borrowing. That is what we have been doing for a long time," said the controller of budget.

Dr Nyakang'o asked MPs through the committee to look into what she called Treasury's exaggeration of budgets. While looking into the budget for the Consolidated Fund Services, the source of her salary, she found that her annual salary had been budgeted at three times her actual earnings, a discrepancy extended to all state officers.

This situation prompted her to question the Treasury about the budget's excessive estimates. Regrettably, she noted that she had not received a satisfactory response regarding this budgeting discrepancy, raising concerns about the accuracy of budgetary figures in various areas.

"I am the only state officer in my institution so there is nothing like confusion there. And it was like that for all state officers," said Dr Nyakang'o.

She said the country's excessive borrowing practices and expenditure patterns had contributed to the current financial crisis. She proposed a review of various areas for budget cuts, which included domestic and international travel expenses, refurbishments and fuel consumption.

The stakeholders also proposed merging Ministries, Departments and Agencies (MDAs) with similar and overlapping mandates, curtailing enactment of new legislation establishing State Corporations and Privatisation of non-performing State Corporations.

The Institute of Economic Affairs CEO Kwame Owino said his research showed the government's overbudgeted on things such as fuel and telecommunication allowances accorded to government officers.

He revealed that the budget for government expenditure on fuel suggested that the government of Kenya was buying 150,000 diesel a day. A number that Parliament approved.

"That cannot be right. Where are all these vehicles traveling to? We also checked telecommunications and found that certain departments in the public sector have a telecommunications bill of Sh20,000 per person per month," said Kwame.

Mr Owino did not spare Parliament from his critical analysis, pointing out its flawed oversight and lamenting the costly economic policies that resulted from insufficient due diligence.

He emphasised that trillions of shillings had been borrowed without any discernible benefit to the average citizen. He raised a grave concern about the integrity of the current governance system, which he argued significantly contributed to the ongoing financial crisis.

"If Parliament did its work diligently and went line by line on the budget and asking, why are we buying this quantity of things, you would find a lot of space for savings," said Kwame.

He also proposed that the government consider cushioning the poorest, arguing that 20 per cent of the 14 million households in the country had their incomes shrink by 30 per cent relative to prices of food.

"Those people need help. If the government wanted to extend that to them by expanding the food subsidy it could be distributed easily through mobile money transfers. And this is a temporary measure which is not a permanent one," argued Owino.