In the university, a supplementary exam is a second chance to pass a subject. Students would normally cut short their holidays to sit ‘sups’.
Hence, the National Treasury and the National Assembly have had their holidays cut short to work on a supplementary budget before even the 2018/19 books opened.
The good news is that this can be used to stave off a full-blown cash flow and macroeconomic crisis. The bad news? It won’t happen.
Looking at the Treasury statement, it seems Cabinet Secretary Henry Rotich has avoided the hard choices and gone for cosmetic changes.
The main purpose of a budget should be to set priorities and make the necessary trade-offs. The statement, which the House was to debate, fails that test.
So much is wrong with the 2018/2019 Budget that we don’t even know its size.
Mr Rotich put total expenditure at Sh2.55 trillion; the budget out-turn of the July gazette notice had it at Sh2.629 trillion. His statement wants grand total expenditure reduced from Sh3.026 trillion to Sh2.971 trillion. It is a dog’s breakfast!
If you cannot accurately measure or estimate it well, you definitely cannot manage it. There has been a lot of talk and focus on the size of the national debt and little on its mismanagement.
Prudent management of government finances requires debt strategies and planning that take into account the level of debt that can be financed over a determined period without an unrealistically large future correction to the balance of income and expenditures.
It is because that was not done that we have had a National Assembly session this week. Equally important is the management of the composition and structure of the debt portfolio for its cost to be low and for it to be as less vulnerable as possible to market shocks.
The current debt portfolio is highly vulnerable to financial, fiscal and macroeconomic conditions.
The overall size is not right, the mix between domestic and foreign debt not optimal and the administration has shortened the average duration of the debt from over nine years to almost four — meaning there is more pressure to refinance the debt at any one time.
That is influencing the economy inversely in the form of high debt-servicing costs, leading to decreased expenditure on development.
Debt servicing costs, at more than Sh800 billion, are way above development spending. That is likely to worsen, given that we have to refinance over Sh200 billion of maturing foreign currency-denominated commercial debt.
And we would have to do it without the insurance programme from the IMF. The World Bank’s latest review has pointed out the weak capacity of the Debt Management Office (DMO) and its lack of clear leadership and accountability.
It says although the Treasury publishes Debt Management Strategy papers, it isn’t clear that this is being followed. Even the publication of monthly debt bulletins on its website ceased last year.
The only way out of the current budget problems and a potential debt crisis is to manage the debt portfolio well.
The best strategy is to substantially reduce the deficit to less than five percent. You cannot get that right if your revenue projections are always wrong — or pie in the sky.
The fiscal mathematics of any budget hinges on one key assumption: The projection for revenue growth.
The Treasury projects revenues of Sh1.9 trillion as they somehow think the economy will grow at six to seven per cent — despite increasing debt, rising taxes, public expenditure cuts and most private sector CEOs expecting profits to grow by a maximum two per cent.
We will be lucky to collect Sh1.5 trillion this fiscal year — meaning we must borrow the Sh400 billion shortfall, making the stated 5.8 per cent budget deficit fake news. The actual deficit is, thus, eight to nine per cent.
A lower deficit will reduce the cost of debt servicing. The refinance risk the government is carrying with a huge holding of Treasury bills could potentially allow it to roll over the domestic debt much cheaper if it reduced its borrowing.
A 200 basis points saving on the Sh2.6 trillion domestic debt could save it Sh52 billion in interest — double the Sh17.5 billion the unpopular fuel VAT would bring in — and stimulate credit to the private sector.
For the foreign debt, the best strategy to reduce the interest bill and create fiscal space would have been to stay with the IMF.
The fuel VAT is a symptom of a bigger problem that, if not managed well, will bring the house down.
You cannot have five consecutive years of more than eight percent fiscal deficit and not experience a debt crisis. This is the problem MPs should be tackling, not VAT.
Mr Wehliye is a senior adviser to the Saudi Arabian Monetary Authority. [email protected]
Public officers above 58 years and with pre-existing conditions told to work from home: The Standard
Head of Public Service Joseph Kinyua. [File, Standard]
In a document from Head of Public Service, Joseph Kinyua new measure have been outlined to curb the bulging spread of covid-19. Public officers with underlying health conditions and those who are over 58 years -a group that experts have classified as most vulnerable to the virus will be required to execute their duties from home.
However, the new rule excluded personnel in the security sector and other critical and essential services.
“All State and public officers with pre-existing medical conditions and/or aged 58 years and above serving in CSG5 (job group ‘S’) and below or their equivalents should forthwith work from home,” read the document,” read the document.
To ensure that those working from home deliver, the Public Service directs that there be clear assignments and targets tasked for the period designated and a clear reporting line to monitor and review work done.
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Others measures outlined in the document include the provision of personal protective equipment to staff, provision of sanitizers and access to washing facilities fitted with soap and water, temperature checks for all staff and clients entering public offices regular fumigation of office premises and vehicles and minimizing of visitors except by prior appointments.
Officers who contract the virus and come back to work after quarantine or isolation period will be required to follow specific directives such as obtaining clearance from the isolation facility certified by the designated persons indicating that the public officer is free and safe from Covid-19. The officer will also be required to stay away from duty station for a period of seven days after the date of medical certification.
“The period a public officer spends in quarantine or isolation due to Covid-19, shall be treated as sick leave and shall be subject to the Provisions of the Human Resource Policy and procedures Manual for the Public Service(May,2016),” read the document.
The service has also made discrimination and stigmatization an offence and has guaranteed those affected with the virus to receive adequate access to mental health and psychosocial supported offered by the government.
The new directives targeting the Public Services come at a time when Kenyans have increasingly shown lack of strict observance of the issued guidelines even as the number of positive Covid-19 cases skyrocket to 13,771 and leaving 238 dead as of today.
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Principal Secretaries/ Accounting Officers will be personally responsible for effective enforcement and compliance of the current guidelines and any future directives issued to mitigate the spread of Covid-19.
Uhuru convenes summit to review rising Covid-19 cases: The Standard
President Uhuru Kenyatta (pictured) will on Friday, July 24, meet governors following the ballooning Covid-19 infections in recent days.
The session will among other things review the efficacy of the containment measures in place and review the impact of the phased easing of the restrictions, State House said in a statement.
This story is being updated.
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Drastic life changes affecting mental health
Kenya has been ranked 6th among African countries with the highest cases of depression, this has triggered anxiety by the World Health Organization (WHO), with 1.9 million people suffering from a form of mental conditions such as depression, substance abuse.
Globally, one in four people is affected by mental or neurological disorders at some point in their lives, this is according to the WHO.
Currently, around 450 million people suffer from such conditions, placing mental disorders among the leading causes of ill-health and disability worldwide.
The pandemic has also been known to cause significant distress, mostly affecting the state of one’s mental well-being.
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With the spread of the COVID-19 pandemic attributed to the novel Coronavirus disease, millions have been affected globally with over 14 million infections and half a million deaths as to date. This has brought about uncertainty coupled with difficult situations, including job loss and the risk of contracting the deadly virus.
In Kenya the first Coronavirus case was reported in Nairobi by the Ministry of Health on the 12th March 2020. It was not until the government put in place precautionary measures including a curfew and lockdown (the latter having being lifted) due to an increase in the number of infections that people began feeling its effect both economically and socially.
A study by Dr. Habil Otanga, a Lecturer at the University of Nairobi, Department of Psychology says that such measures can in turn lead to surge in mental related illnesses including depression, feelings of confusion, anger and fear, and even substance abuse. It also brings with it a sense of boredom, loneliness, anger, isolation and frustration. In the post-quarantine/isolation period, loss of employment due to the depressed economy and the stigma around the disease are also likely to lead to mental health problems.
The Kenya National Bureau of Statistics (KNBS) states that at least 300,000 Kenyans have lost their jobs due to the Coronavirus pandemic between the period of January and March this year.
KNBC noted that the number of employed Kenyans plunged to 17.8 million as of March from 18.1 million people as compared to last year in December. The Report states that the unemployment rate in Kenya stands at 13.7 per cent as of March this year while it stood 12.4 per cent in December 2019.
Mama T (not her real name) is among millions of Kenyans who have been affected by containment measures put in place to curb the spread of the virus, either by losing their source of income or having to work under tough guidelines put in place by the MOH.
As young mother and an event organizer, she has found it hard to explain to her children why they cannot go to school or socialize freely with their peers as before.
“Sometimes it gets difficult as they do not understand what is happening due to their age, this at times becomes hard on me as they often think I am punishing them,”
Her contract was put on hold as no event or public gatherings can take place due to the pandemic. This has brought other challenges along with it, as she has to find means of fending for her family expenditures that including rent and food.
“I often wake up in the middle of the night with worries about my next move as the pandemic does not exhibit any signs of easing up,” she says. She adds that she has been forced to sort for manual jobs to keep her family afloat.
Ms. Mary Wahome, a Counseling Psychologist and Programs Director at ‘The Reason to Hope,’ in Karen, Nairobi says that such kind of drastic life changes have an adverse effect on one’s mental status including their family members and if not addressed early can lead to depression among other issues.
“We have had cases of people indulging in substance abuse to deal with the uncertainty and stress brought about by the pandemic, this in turn leads to dependence and also domestic abuse,”
Sam Njoroge , a waiter at a local hotel in Kiambu, has found himself indulging in substance abuse due to challenges he is facing after the hotel he was working in was closed down as it has not yet met the standards required by the MOH to open.
“My day starts at 6am where I go to a local pub, here I can get a drink for as little as Sh30, It makes me suppress the frustration I feel.” he says.
Sam is among the many who have found themselves in the same predicament and resulted to substance abuse finding ways to beat strict measures put in place by the government on the sale of alcohol so as to cope.
Mary says, situations like Sam’s are dangerous and if not addressed early can lead to serious complications, including addiction and dependency, violent behavior and also early death due to health complications.
She has, however, lauded the government for encouraging mental wellness and also launching the Psychological First Aid (PFA) guide in the wake of the virus putting emphasis on the three action principal of look, listen and link. “When we follow this it will be easy to identify an individual in distress and also offer assistance”.
Mary has urged anyone feeling the weight of the virus taking a toll on them not to hesitate but look for someone to talk to.
“You should not only seek help from a specialist but also talk to a friend, let them know what you are undergoing and how you feel, this will help ease their emotional stress and also find ways of dealing with the situation they are facing,” She added
Mary continued to stress on the need to perform frequent body exercises as a form of stress relief, reading and also taking advantage of this unfortunate COVID-19 period to engage in hobbies and talent development.
“Let people take this as an opportunity to kip fit, get in touch with one’s inner self and also engage in reading that would help expand their knowledge.