The reduction is contained in the supplementary budget estimates prepared by National Treasury Cabinet Secretary Henry Rotich and tabled during a special sitting of the National Assembly on Tuesday.
If adopted by the MPs on Thursday – during a second special sitting, the budget will reduce to Ksh2.971 trillion ($29.7 billion) as the government fights to bridge a huge deficit because it is only able to raise about Ksh1.6 trillion ($16 billion).
The proposed cuts will be considered on Wednesday by the Budget and Appropriations Committee, before the report is tabled in the House on Thursday.
Some of the biggest losers are the Devolution ministry (Ksh6 billion; $60m), National Treasury (Ksh6 billion; $60m), the Information and Communication Technology ministry (Ksh5.9 billion; $59m) and the Energy docket (Ksh2.6 billion; $26m).
The Infrastructure ministry is set to lose Ksh8.7 billion ($87m) while the Foreign Affairs ministry will lose Ksh179.5 million ($1.8m).
The Ksh36 billion ($360 million) allocated to Parliament will also reduce by Ksh5 billion ($50 million) while the National Lands Commission (NLC) will lose Ksh50.4 million ($0.5m).
The education sector was not left behind. The Vocational and Technical Training has had its budget slashed by Ksh1.3 billion ($13m), University Education and Research by Ksh1.07 billion ($10.7m), Early Learning and Basic Education by Ksh487.3 million ($4.8m) and the Teachers Service Commission (TSC) by Ksh67.7 million ($0.67m).
Mr Rotich said in his statement to the MPs that the government has to make prudent policy decisions so that unwarranted debt burden is not imposed on future generations.
“Over the medium term, the national government’s borrowing shall be used only for the purposes of financing development expenditure and not for recurrent expenditure,” he said, despite accusations by critics over the spiralling corruption in the public institutions.
As the other sectors suffered cuts, the Ksh32 billion ($320m) allocated to the National Intelligence Service (NIS) remained intact and so was the case with Ksh2.9 billion ($29m) for the Ethics and Anti-Corruption Commission( EACC).
The Auditor General’s office lost Ksh110 million ($1.1m) and the Controller of Budget Ksh15 million ($150,000).
($51b) mark as at June 30, 2017.
In a bid to cure the growing debt, the International Monetary Fund (IMF) has proposed a slowdown on the borrowing appetite and a funding of the budget from within, a move that brought on the 16 per cent Value Added Tax (VAT) on fuel products.
President Uhuru Kenyatta want the tax rate halved.
Though the IMF move has been opposed by Kenyans and political leaders, President Kenyatta recently said there are no option so Kenyans must persevere to gain in future.
A section of MPs are, however, apprehensive that the gains may never be realised with increased looting of public resources.
Interestingly, the Housing docket lost Ksh80 million ($0.8m) despite being part of the president’s Big Four Agenda for affordable housing for Kenyans as he leaves office in 2022.
Mr Rotich has promised to ensure that up to 30 per cent of the national budget is allocated to development.
He said that all internal and external borrowing will be restricted to the funding of development projects.
Compensation of employees – benefits and allowances – will now be restricted to 35 per cent of the national budget.
“We have made adjustments to the programmes and votes as a result of amendments to the Finance Bill, 2018. Some of the adjustments exceed 10 per cent. We are, in this regard, requesting special approval of the expenditure adjustments,” he said.
According to the CS, going forward, the government will come up with measures to realise the 35 per cent threshold provided for in Section 26 (1) (a) of the Public Finance Management Regulations, 2015.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.