Beginning***Africa

Kenia (1) -- Analyses -- 2010

Boosting economic recovery

10.06.2010

In his budget speech, Uhuru spelt out a raft of measures that will spur economic growth. The minister also moved to remove economic growth constraints to ensure the projected economic growth.
The government expected a deficit of 188 billion shillings, or 6.8 percent of gross domestic product, which he said would be financed through domestic borrowing of 105.3 billion shillings and external financing of 82.7 billion.
"Growth in this period, will be driven mainly by increased investments in key sectors including agriculture, services, infrastructure, health and education and targeted strategic development interventions," Kenyatta said. "The government will contain the growth in public debt to a sustainable level to ensure the private sector is not crowded out."
The Minister says development expenditure for 2010/2011 is Sh321bn, out of which Sh96bn will be financed by appropriations aid. In taxation, an area that bears much meaning to the common Kenyan, the Finance Minister has lowered import duty on wheat from 35 to 10 percent. The duty on imported rice has also been lowered from 75 to 35 per-cent. Import duty on poultry feed has been abolished.
Also scraped is import duty on lead lamps and bulbs and that of iron and steel. An advance tax initially paid by PSV before being issued with PSV licenses has also been scrapped. To encourage home ownership the stamp duty on mortgage has been lowered to 0.1 percent. Banks spending on mortgage has also been increased from 25- 40 per-cent. Kenyans living in the diaspora have also been given a one year tax amnesty. Pensioners also have something to smile about as they will be paid in 30 as opposed to the earlier 60 day period.
The constituency development fund has also been increased from 12 to 14.3 billion shillings. However the Finance Minister put on notice insurance companies that delay policy holder's payment. Such companies will now be required to pay members contributions and any accruing interest. The Minster further warned that stern action will be taken against persons who evade paying taxes. Kenyatta says a tax reform commission will be appointed to look into the matter. He further directed Central Bank of Kenya and Kenya Revenue Authority to audit all forex bureaus which he said were assisting the fraudsters to swindle the government of much needed funds. As is the common practice taxes were hiked for beer lovers. Excise duty on malt was increased from sh 54 to 65 per litre. The government hopes to generate an additional Sh2.5 billion through this measure.