The donor community and financial analysts say the national budget was well thought but will not balance.

It did not take into consideration austere government expenditure measures.

"Consistent tax reduction was a welcome idea but silence on bloated government expenditure would put the budget out of balance," said the European Union country representative, Mr Lutz Salzmann.

He said follow-up measures to last year's budget needed to be made to ensure prudent and honest expenditure.

Last year's budget took serious expenditure trimming measures. Implementation however proved difficult. This time round, the minister should have put in place specific mechanisms to reduce the government expenditure," he said.

He said the last expenditure reduction measures could not be implemented due to lack of coordination in government.

The government was still accumulating domestic debts.

"It is a miraculous measure to solve the problem in the short term. It is however a way of shifting debts from one hand of the economy to the other," he said.

He said the government should have taken revenue collection measures rather than shifting the debts burden "from one shoulder to the other".

Concerning restrictions put on imports, Mr Salzmann said the country was moving a step from the Lome convention of allowing competitiveness in international trade.

He argued that the country should have taken measures to increase efficiency in the manufacturing sector, to give local goods a competitive edge.

He said the increase of petrol prices would make an impact on the infrastructure if implemented but this remained to be seen.

A financial analyst, Mr James Wangunyu, argued that the minister should not have re-introduced presumptive tax as farmers were already over-burdened.

"Farmers are not being paid their dues. Where is the minister expecting to get the taxes?"

On Treasury bonds being introduced in the market, Mr Wangunyu, who is the managing director of Standard Stocks said it was a welcome financial instrument which would add liquidity to the Nairobi Stock Exchange.

The managing director of Suntra Stocks, Mr James Murigu, however said that with reduced commission to stock brokers when trading in bonds, it would be difficult to market the bond.

He said there was no reason for the minister to have allowed dealers at the stock market next year.

"It did not require that length of time given the prevailing bearish market (inactive market). We expected the minister to allow dealers in the market immediately so that they could activate business," he said.

He said increasing fuel levy was likely to suffocate the already weakened small income earners.

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