This archive report was first published on 16 November 2019.
On November 16, 2019, the Kenyan government announced a supplementary budget of Sh86.6 billion, a move that has raised concerns about the country's financial indiscipline.
The Treasury has characterised the move as a reorganisation of spending to prioritise development projects, with the majority of the funds going towards roads, health, and other infrastructure projects targeting the manufacturing sector.
However, critics argue that this is just another indication of the fiscal indiscipline of President Kenyatta's regime, with over Sh60 billion in stolen money reported in the last year alone.
The announcement comes as the Kenya Revenue Authority (KRA) is expected to miss its revenue target, with the economy not growing fast enough to keep up with the financial indiscipline of the administration.
The Standard Gauge Railway (SGR) is operating under capacity, while projects to boost agricultural productivity have stalled. The country is also paying for expensive power it does not consume, with cartels in the power sector milking the public dry.
Furthermore, the government has been binging on expensive loans and ignoring cheaper concessional loans, with the Treasury recently confessing its desire to reorient borrowing towards concessional loans.
The government is quickly running out of fiscal runway, with the recent scrapping of the interest rate limit increasing the cost of domestic borrowing and the risk of devaluation of the shilling.
As the economy is not growing in the right ways, the biggest structural risk comes from the fact that infrastructure spending has been turbocharging the economy for six years, but in the wrong ways.
It is time for the Treasury to clean up its act, and President Kenyatta to show real leadership.
