Budget office questions State over Sh797m overspent on pensions

By Lillian Kiarie

The Controller of Budget has questioned the source of Sh797 million that was overspent in payment of debt, pensions and salaries for constitutional office holders. This is even as Kenya’s debt continues to swell increasing the amount that the Government spends on servicing it.

For the period between July and September 2013, Treasury issued Sh28.7 billion to cater for public debt, salaries for constitutional office holders, pensions and gratuities and payment to international organisations but still Sh797 million was recorded to have been over spent.

“The expenditure was higher than the exchequer issue by Sh797 million,” states the first quarter report of the year 2013/2014.

Agnes Odhiambo, Controller of Budget said that there is need for reconciliation of the financial records to account for the over-expenditure. “The returns from pensions do not clearly show the source of the over expenditure. There is need for transparency in the public financial management for both the national and county governments,” said Ms Odhiambo. Public debt increased by Sh163.3 billion from Sh1.89 trillion in June 2013 to Sh2.06 trillion as at the end of September 2013 representing 56.0 per cent of the GDP.

This amount encompasses of Sh1.17 trillion as domestic debt and Sh889.32 billion as foreign debt.

Treasury Bonds

Public debt which entails domestic debt, foreign debt and guaranteed loans to state corporations has seen the country sink deeper into liabilities at a period when the Government is struggling to ensure economic growth.

During the period, the government paid a total of Sh22.03 billion for both domestic and external debt. The report shows debts accrued locally from governments borrowing increased from Sh922.2 billion in September 2012 to Sh1.17 trillion in September 2013. “In total, the Government borrowed Sh1.17 trillion, ten times more of what it had previously budgeted to borrow from the domestic market in the financial year 2013/14 to finance the budget deficit,” says Ms Odhiambo.

This was done by moving Treasury Bills of Sh307.6 billion, Treasury Bonds worthy Sh794.8 billion and others including overdraft from Central Bank of Kenya of Sh34.2 billion during the first quarter of 2013/2014 financial year.

Additionally, the domestic debt service for the period stood at Sh2.9 billion out of the budget allocation of Sh127.25 billion and Sh110.21 billion for principal redemption and interest payments respectively. The total public and publicly guaranteed external debt stock as at end of September 2013 stood atSh89.32 billion. 

“The government had budgeted to borrow a total of Sh223 billion externally to finance the budget deficit for the financial year 2013/14.

The cumulative loans revenue from external sources in the first quarter was Sh2.8 billion and the external debt service amounted to Sh9.15 billion against the budget allocation of Sh99.81 billion for the financial year 2013/2014.