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Kenyatta announces budget cuts to bridge deficit

Kenyatta says the proposed cuts will affect hospitality, foreign and domestic travel, training and other less essential spending

NAIROBI, Kenya, Sep 14 – President Uhuru Kenyatta has announced wide-ranging austerity measures and budget cuts in a bid to reduce the widening deficit between revenue and expenditure.

Kenyatta says the proposed cuts will affect hospitality, foreign and domestic travel, training and other less essential spending adding that these changes will cut across all arms of government.

“These budget cuts ask all of us in government to tighten our belts. It also ensures that the sacrifices made by tax compliant Kenyans are matched by discipline,” said the President in a televised address from State House, Nairobi.

The National Treasury aims to reduce the budget deficit from 7.8pc in the 2017/18 financial year to 5.7pc in the 2018/19 financial year.

Kenyatta has further cited budgetary demands as his reason for rejecting the Finance Bill amendment that aimed to postpone the VAT on fuel by two years and instead counter-proposing a reduction of the VAT on petroleum products by half.

Should Parliament accept the President’s proposal, the price of super petrol will drop from Sh127 to about Sh118, and the price of diesel will drop from Sh115 to about Sh107.

While giving his reason for rejecting the Finance Bill 2018/19 that aimed to further postpone the implementation of the 16pc VAT on petroleum products, the President said the bill, fell short of the constitutional threshold, of “national aspirations, fulfilling government’s basic obligations to our people, and are implementable.”

“It protected the status quo and sacrificed the bigger vision. It took the easy path, instead of rising to the challenges of our time. It was good politics, but bad leadership,” said Kenyatta.

The President, who has returned the bill to parliament with his recommendations, said the new constitutional order widened the structure of government with the National Assembly growing from 290 members to 349, and 67 elected and nominated senators.

“We also have forty-seven governors, forty-seven deputy governors, and forty-seven new county assemblies – in which sit more than a thousand MCAs.”

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“Additionally, we have sixteen independent offices and commissions, excluding the judiciary. As you can see, the enjoyment of our new rights is expensive, unprecedentedly so,” argued the President who has now thrown the ball back to parliament to consider his proposals.

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