The National Treasury incurred Sh54.68 billion in unbudgeted public expenditure towards the end of President Uhuru Kenyatta’s term.
This raised questions about the fiscal discipline of a country that is grappling with liquidity issues and a huge public debt, on a day when MPs accused the National Treasury of overstepping its mandate in the budget-making process.
The expenditure worsened the issue of pending bills, making the budget deficit a moving target.
The National Treasury now expects the National Assembly to regularise the expenditure post facto.
Of the amount incurred, Sh23.1 billion has already been disbursed to the various government ministries and state departments, with the balance in the pipeline.
A document presented by the Parliamentary Budget Office (PBO) to the MPs during their induction at a city hotel shows the National Treasury has already prepared supplementary estimates I for the 2022/23 financial year to be regularised by the National Assembly in line with Article 223 of the Constitution.
The supplementary estimates will be among the first issues to be dealt with by the 13th Parliament when it starts its sittings in the coming days, notwithstanding that it is barely three months since the 2022/23 budget was appropriated by the National Assembly.
The expenditure is therefore over and above the Sh3.33 trillion budget that was passed by Parliament in June this year.
This means the government will have to look for more funds to finance the extra budget, further stretching the country’s public debt that is projected to hit Sh9.4 trillion by June next year.
The country’s public debt stands at Sh8.7 trillion.
The document by the PBO, which advises Parliament and its committees on fiscal matters, shows the Ministry of Petroleum and Mining has been allocated an extra Sh16.6 billion for fuel price stabilisation, State Department for Infrastructure Sh11.35 for road construction, State Department for Basic Education Sh8.2 billion for the Kenya primary and secondary education and National Treasury Sh6.1 billion to finance Telkom Kenya, whose expenditure has not been explained.
There was also Sh4.5 billion for the State Department for Crop Development and Agriculture Research for the maize flour subsidy, Ministry of Defence Sh3.5 billion for the construction of a research hospital and Sh3.77 billion to the Office of the President, whose expenditure has not been explained.
The ministries and state departments that have already received the funds include the Ministry of Defence (Sh2.2 billion), National Treasury (Sh6.1 billion), State Department for Infrastructure (Sh9.5 billion), State Department for Crop Development and Agricultural Research (Sh4.5 billion) and Executive Office of the President Sh810 million.
Further, Sh420 million has been allocated to the Ministry of Health for donor-funded projects, Sh139 million to the State Department for University Education for donor-funded projects and Sh125 million to the State Department for Interior for security operations.
On Tuesday, MPs David Mwalika (Kitui Rural), John Kiarie (Dagoreti South) and Shakeel Shabbir (Kisumu Town East) accused the National Treasury of violating the Constitution and turning lawmakers into rubber-stamps.
“The National Treasury has misused the spirit of the supplementary budget to the extent of even paying salaries,” said Mr Mwalika as he suggested a legislative mechanism to tame the National Treasury’s abuse of the Constitution.
The fact that the items budgeted for in the supplementary budget were not in the budget for the current financial year distorts the budget preparation.
“What is emerging is that Kenya has a budgeting problem. By doing this, the National Treasury is showcasing how it has become opaque on a matter that should have a huge input from Kenyans,” said Mr Kiarie.
Article 223 of the Constitution stipulates that the national government may spend money that has not been appropriated by Parliament and seek post-facto approval within two months of the first withdrawal on condition that the amount budgeted is insufficient.
The expenditure must, however, not exceed 10 percent of the appropriated sums.
The government can also spend if a need has arisen for expenditure for a purpose for which no amount was appropriated by the National Assembly.
That need may be a natural disaster like floods, drought, a pandemic like Covid-19 or an emergency that cannot wait for Parliament to appropriate resources.
The current budget has a deficit of more than Sh846 billion that is to be financed through local and in foreign financing.
This includes Sh120 billion that was to be financed through Euro Bond that was however abandoned for domestic borrowing after the National Treasury realised that at 12 per cent, the repayment interest was so high for the country to procure the loan.
The higher interest rate was attributed to the ongoing Russia-Ukraine war, which has affected the global economy.
But what happens if the National Assembly declines to approve the money already in the hope of a post facto approval by MPs?
As the budget-making House since the 2010 Constitution came into force, members of the National Assembly are yet to shoot down a supplementary budget.
“This is definitely an area that requires legislative intervention. We cannot continue abusing the Constitution like this. It has to stop,” Mr Mwalika noted.
Although the Constitution and the Public Finance Management (PFM) Act give MPs the powers to make the budget, the country has always ended up with the executive budget largely because of how the numbers in the House have played out.