Friday, June 08, 2007

A different budget this time

Ahmed Mohamed while assessing the economy of Kenya addresses key economic factors and indicators that the Minister of Finance, Amos Kimunya, will have to include while preparing this year's budget.
Past Finance Ministers, including Kibaki himself had comparatively easy task of achieving popular acclaim. All they had to do was as simple as fixing the prices of certain class of consumer items at lower prices. Kimunya's hands however, are tied by both the liberalized economy and a question of balancing expenditure priorities. While it will be easy to reduce taxes especially on basic food items to influence price reduction, he will be required to off set the foregone tax revenue with a hike elsewhere. And that is where the complications will start to arise. Arbitrary tax transfers have their own risks including potential disruption of current economic buoyancy.
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