Treasury’s move to track public spending likely to increase discipline in budget implementation

Last week, the IFMIS Department of the National Treasury said it would in the course of March launch a system that will give the Cabinet and Principal Secretaries a real time view of how all Ministries and State agencies spend their budgetary allocations.

This is part of the Government’s efforts to streamline public finance management that started with IFMIS Re-engineering in 2011.

The IFMIS Business Intelligence Dashboard is expected to help put a stop to the numerous instances where monies set aside for development projects end up being used for recurrent budget.

The system will monitor how all Ministries, Departments and Agencies (MDAs) spend funds on a real time basis in a bid to improve the monitoring of Budget implementation.

This is a laudable move as it will now mean government officials will exercise more caution in how they spend public funds. And if not, the Cabinet secretaries should be able to arrest the situation before it gets out of hand, given that they will be in the loop the entire time.

A major impact will be the control of diversion of development funds to cater for what has in the past been said to be more pressing needs. Such diversions have always had an impact of slowing down development projects and to a major extent, Kenya’s economic growth.

Given that road, water, power, telecommunications and other essential infrastructure play a critical supportive role in the growth of other economic sectors, when we do not spend enough on such areas, the end result is that our economy will always post marginal growth rates.

Not to underplay the importance of recurrent expenditure considering that the same state officials are the ones that will oversee the execution of development projects. But the constant ‘borrowing’ from the development budget to meet our ‘more pressing needs’ will see us running an economy without a development budget and running the risk of having an economy that is stagnating or even worse, growing in the negative

In the course of any given financial year, the country’s spending is usually heavily weighted toward recurrent spending, which takes up more than it is allocated. Sometimes the recurrent expenditure surpasses the legal threshold of 70 per cent of the budget, where state officials will take monies set aside for development and use it for recurrent purposes.

As per the Public Finance Management Act (2012), a minimum of thirty per cent of the country’s annual budget must be set aside for development purposes. In several instances, The National Treasury has exceeded this target, setting aside in some instances over 40 per cent of the country’s budget for development purposes.

IFMIS Business Intelligence Dashboard will bring an end to the era of diverting development funds to recurrent budgets. With the cabinet and principal secretary having a view of the spending by Ministries, Departments and Agencies as it happens, it will be increasingly difficult for state officials to divert development funds to cater for the recurrent budget.

The IFMIS Business Intelligence Dashboard will give access to a real time summary of the expenditure made by all MDAs and enable measuring of budget performance against work plans. The Dashboard is designed to give graphical representation of allocated budgets and expenditure levels at a single log in.

The Cabinet Secretaries and their Principal Secretaries will through the dashboard know which state agencies housed by their ministries do not have adequate absorption capacity, not at the end of the financial year when they are obligated to return money to Treasury but early enough when they can correct anomalies. They will also see the agencies that hold huge amounts of money throughout the fiscal year and only spend towards end of financial year and in turn making unnecessary expenditure in a bid to exhaust their allotted funds.

The IFMIS Business Intelligence Dashboard, which will without a doubt significantly improve public funds management in Kenya, will also be cascaded to the counties, giving Governors a bird’s eye view on how officials from their respective counties are spending county funds.

Already, The National Treasury has rolled out IFMIS to all MDAs and the 47 counties. Many of the MDAs and County Governments are at advanced stages of using the system. Treasury is in the process of rolling out IFMIS to State corporations, beginning with the 19 corporations under the National Treasury, on a pilot basis.

 Managing budgets and expenditures through IFMIS has helped increase transparency and enhanced easy reporting in National and County governments. The PFM Act (2012) requires all public institutions to carry out their transactions through a system prescribed by the National Treasury, which in this case is IFMIS.

Nyawira is a communications consultant, with a bias in public finance management