Parliament has poked holes into Cabinet Secretary Ukur Yatani’s mini-Budget, accusing the government of not making full disclosures on financing and spending of Sh14.4 billion.
A report by the National Assembly’s Budgetary and Appropriations Committee (BAC) accuses Treasury of not providing proof of payment for some of the excess spending, and also hints at borrowed cash being used to finance recurrent expenditure.
Moreover, notes the committee, the third Supplementary Budget for the 2019-20 financial year, in which Yatani seeks permission to spend the additional Sh14.4 billion, does not reveal where the revenues would come from.
On Friday, Yatani tabled the mini-Budget with only five days to the end of the current financial year.
The mini-Budget also shows that State House’s planned expenditure for the purchase of vehicles and other transport equipment surged close to 10 times to Sh220 million compared to Sh23 million in the last national spending review.
However, the Budget committee, led by vice chairman Moses Lessonet, said the Treasury provided the legislators with scanty information on the impact of the additional spending.
They further said it was not possible to tell when the withdrawals for the excess spending were done as there is no proof of payment provided, which is contrary to the law.
“In 2019, the National Assembly recommended a special audit following inconsistencies in a series of payments vis-à-vis the outstanding claims, as well as disputed invoices and unclear basis for the claims,” read part of the BAC report.
“A clear way forward on this matter should be agreed upon urgently.”
Additionally, reallocations for three out of 159 programmes and votes exceeded the 10 per cent legal threshold, according to the committee.
“The National Treasury has acknowledged this and submitted its request for special approval of the expenditure adjustments exceeding the 10 per cent threshold in accordance with Article 223(5) of the Constitution,” said the report.
BAC was also concerned by the introduction of some new items into the Supplementary Budget, which is aimed at pumping more cash into Covid-19-related expenditure.
There is little analysis from the Exchequer on the impact of the additional expenditure on the total Budget, it said.
“There is lack of clarity on the allocation for domestic travel as this is recorded to have been spent in some ministries,” noted the BAC report.
Of particular concern to the team was that some of the borrowed cash might have been spent on recurrent expenditure, with “indications of operations and maintenance expenses being reflected in the development budget”.
Most development projects are financed using borrowed money. Lately, the government’s coffers have been replenished with billions of shillings in cheap loans from the World Bank, International Monetary Fund and African Development Bank.
The law allows a State corporation to overspend.
“If an accounting officer finds, after Appropriation Accounts are completed, that he has spent more than the total vote, that accounting officer shall seek parliamentary approval through the Cabinet Secretary for that excess vote,” reads part of the Public Finance Management Act, 2012.
It is possible that most of the additional spending will be financed using borrowed cash, as muted economic activities occasioned by stringent containment measures have seen tax revenues dwindle.
Tax collections in May were at the lowest in five years, with the Kenya Revenue Authority netting Sh90 billion. This was a drop of slightly over a third from Sh134 billion collected in May 2019.
With only five days to the end of the financial year 2019-20, it is possible that the Treasury is only rationalising what ministries, departments and agencies had already spent in its latest mini-Budget.
It is not the first time the Treasury is tabling a Supplementary Budget towards the end of a financial year.
Last year, former Treasury CS Henry Rotich brought to Parliament a mini-Budget for the financial year 2018-19 on June 10, just over two weeks to year-end.
This is Yatani’s third Supplementary Budget.