Treasury Cabinet Secretary Njuguna Ndung'u has expressed confidence that Kenya is on a path to economic recovery ahead of the upcoming budget reading.
Ndung'u highlighted that today's budget will outline the available resources aimed at boosting growth across the country.
"The budget outlines the available resources because everyone is focusing on that aspect. What measures are in place to raise resources? Ultimately, it's about looking at revenue-raising measures alongside policies and programs," Ndung'u stated.
He further noted, "For instance, the economic growth for 2023 was 5.6%, and as of April, inflation has decreased to 5%. These figures provide strong evidence that economic recovery has been underway since the latter part of 2023."
Ndung'u made these remarks during a media briefing at his office, underscoring the positive trajectory in Kenya's economic indicators as the nation prepares for the budget announcement.
However, the CS emphasised that economic growth remains fragile and necessitates support through robust policies, reforms, and targeted interventions.
He highlighted significant challenges facing these support efforts, particularly the looming issue of debt which poses a serious threat to the ongoing economic recovery.
"One of the severe problems we are grappling with is debt, and it needs to be addressed from various angles. Whenever the budget is discussed, there's often a focus on measures to raise tax revenue, but that's just one part of the equation. I want to underscore this issue, which we refer to as a 'tri-lemma'," he explained.
Providing further analysis, the Treasury Cabinet Secretary underscored the public demand for development across various sectors, noting the substantial costs involved for the government.
To fund these projects, the government must seek capital investment or financing to enhance development in the country. According to Ndung'u, these investments can come from debt or through taxes.
"Everywhere you turn, everyone wants the government to spend more, to increase expenditure in things like roads, healthcare, education and others. For the government to finance those aspects, it requires a lot of revenue. The only way you can finance that is through tax revenue or debt," he explained.
As Ndung'u stated, debts are not sustainable and would change from income to expenditure in a short time.
He added that financing projects through taxes is becoming more complex because everyone is resisting taxes.
"The second problem is that you have limitations on debt. Today it can be income, but tomorrow it is going to be an expenditure. The third problem is that if you cannot finance those expenditures through debt then you have to finance them through taxes and everyone resists high taxes. That is why we call it a tri-llema, it is three problems in one problem," he stated.
He clarified that today is budget will emphasise the policies we need to implement to support that fragile economic recovery to generate jobs for the youth and pay our debt among other development strategies.
