TEN WAYS TO SOLVE THE PUBLIC DEBT CRISIS IN KENYA

1. Lower spending - our budget has almost tripled in the last ten years due to expansionary fiscal policies. This needs to stop. There is no shortcut to living within our means.?

Some of the ways of cutting spending include reducing waste, staff rationalisation, pay cuts for government staff, freezing non-essential development spending etc.?

If we reduce spending, the need for borrowing will reduce. We need to cut our spending by 20-30%. We must bite the bullet. Postponing the pain is not a solution.

David Ndii, State-house top ecomomic advisor yesterday during in a TV interview agreed with the criticisms that are pointed out by the people, that the Government is not demonstrating frugality that is consistent with the situation we are in as an economy.

David Ndii says they tried cutting down the number of Gov't officers going for foreign trips to three people per delegation, only to arrive at the conference venue to find the entire Ministry had checked in without them knowing where the extras got the travel cash from.

2. Sell assets - the government should sell shares in profitable state owned enterprises such as Kenya Pipeline, Safaricom, Kengen, KPA, KAA etc. The proceeds should be used to reduce our debt levels

3. Recover looted funds - some of the money we have been borrowing has been stolen. We should recover these funds and use them to reduce our debt levels.

4. Debt restructuring - we need to restructure our debt by lengthening loan maturities and replacing expensive/high interest loans with cheaper/low interest loans. The government should go for IMF bailout to reduce the need for expensive external loans and to settle such loans when they mature

5. Strengthen the shilling - if the shilling appreciates by KShs 10 to the dollar we will save almost KShs 400 billion. This can be achieved by promoting exports, growing tourism, attracting FDI and reducing unnecessary imports through measures such as taxation and import substitution

6. Generate more revenues - this can be done by lowering our tax rates and formalising the economy. We will never achieve our full tax generation potential for as long as the economy remains highly informal. A primitive agrarian micro-enterprise economy will always struggle to deepen and widen the tax base.

Lowering taxes will leave businesses and households with more disposable income and result in higher tax revenues in the end. On the other hand, exploitative, extractive and oppressive taxes exhaust taxation capacity as it encourages tax evasion

7. Reduce corruption. This is one way of lowering spending and also ensuring borrowed funds are spent on projects that grow the economy and ensure their easy repayment.?

Reducing corruption will make Kenyans see value in paying taxes. We need to avoid a situation where paying taxes amounts to financing corruption

8. Invest in objective driven instead of vendor driven projects. We should only invest in projects with clear economic objectives. Investing in projects with no economic returns only serves to increase our debt burden and to enrich a few people

9. Stabilise the policy environment. The government needs to ensure our economic policies are predictable and stable. This will improve the investment environment for both local and foreign investors

10. Improve budget making and national planning. Treasury should stop making unrealistic revenue projections which lead to unrealistic spending targets which eventually result in heavy borrowing. Our debt management strategy should also be adhered to strictly.?

We need to go back to long-term planning such as Vision 2030 instead of relying on poorly thought out plans such as the Big Four Agenda.

Credits: Ephraim Njega, (MBA, BCom, (UoN) Dip(I) MIS(KIM))