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Borrowing is essential for reviving economy, says Kimunya

National Assembly Majority Leader Amos Kimunya has supported the government’s increased spending and borrowing, terming it necessary for efficient service delivery.

Addressing the 37th Annual Conference by the Institute of Certified Public Accountants of Kenya (ICPAK) in Mombasa Tuesday, Kimunya said that so long as the money is spent on providing public services, Kenyans should not criticize the government’s borrowing.

The majority leader was speaking in defense of a statement by ICPAK members who had accused Parliament of continuing to authorize government borrowing despite the ballooning debt.

“I don’t see anything wrong with borrowing. The most important thing is how the funds being borrowed are used. When you shrink your spending just because there is a debt then the economy is likely to collapse. We only need to balance our spending between revenue and the recurrent expenditure,” Kimunya said, adding that in the case of Kenya there are tangible development projects that come with borrowing.

The Kipiriri Member of Parliament had a tough time defending the failure by the legislature to curb the growing debt as concerned members of the accountancy body directed questions to him.

Outgoing ICPAK Chairperson, Rose Mwaura, was concerned by the ever rising national budget against the shrinking revenue, saying there is need to challenge the parliament to stop authorizing borrowing and expose taxpayers to burden rising debt.

“Our budget was Sh3.6 trillion against revenue of Sh1.6 trillion. You see this leaves us with a deficit of about Sh.2 trillion and these are the reasons we can’t stop borrowing. We need to challenge the Parliament to look into such flaws so that Kenyans are secure from the pinch,” she said.

Mwaura at the same time challenged the government to modernize taxation and minimize punitive taxes.

“ICPAK continues to be concerned with the level of borrowing. If we look at our economy, are we able to pay our debt comfortably? Because it is like we are in a lot of push and pull on budget allocation. Do we pay the debt, do we consider the recurrent expenditure or do we focus on development projects?,” posed the outgoing Chairlady who equated the financial situation in the country to a tenant who lives in a Sh300,000 per month rental house in Runda , yet they can only comfortably afford to pay a Sh50,000 per month as rent.

The Incoming Chairman, George Mokua, openly differed with Kimunya’s point of view that the current borrowing is sustainable, dismissing the claim as impractical.

Mokua argued that all indicators at the moment are that “tax revenue has flattened.”

“Even if you tell us that we are putting up projects with the loans, what resultant taxes are we gaining out of the said projects that we are investing in. Are we collecting the rightful taxes? What is going on even with all these taxes coming up, including the minimum tax,” Mokua said, adding the only way for the country to justify the borrowing is by expanding the tax collection to between 15 and 20 percent.

At the same time, ICPAK proposed strengthening of internal audit and audit committees at the county level as a way of curbing unnecessary pillage of resources.

Mwaura argued that currently looking at the audit systems in counties some of them are clogged with quacks who cannot give any meaningful recommendations.

“You will find that there are conflicts of interests where there are individuals who feel it’s their right to enrich themselves from every single transaction that goes through them. This is why we need strengthening of the audit systems to ensure we have proper professionals who can give meaningful recommendations,” she said.

She also observed that threats and intimidations against their members have become a norm, noting that there is need to strengthen laws to protect the members and give them the ability to say no whenever they spot a mistake without fear of jeopardizing their job.

“In most cases they are penalized or even lose their jobs whenever they speak of wrongs they have spotted. We need laws to change this,” said Mwaura.

By Chari Suche

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