How State spent Sh54bn without House approval

Retired President Uhuru Kenyatta’s administration went on a spending spree in the run-up to the August 9 General Election, sinking Sh54.7 billion in several projects without Parliament’s approval.

Data from the National Treasury presented to Members of the National Assembly yesterday shows that the government used the billions to, among other things, provide subsidies for fuel and maize flour.

Lawmakers attending a five-day retreat were shocked to learn that the expenditure was not approved by Parliament. They were informed that the National Treasury would seek their help to regularise the matter once House sittings start.

Members of the Parliamentary Budget Office (PBO), who presented the data to MPs, regretted that the unauthorised expenditure would adversely affect implementation of various projects, owing to  the resultant budgetary shortfall.

Above the limit

The money is above the Sh3.3 trillion that lawmakers approved in June this year for the 2022/2023 financial year.

“We are now in September, two months into the 2022/2023 financial year, and already we have spent Sh54.6 billion. Soon, you will see the Executive asking us to approve this money,” a document from the PBO office shows.

It adds: “This money was never budgeted for in the 2022/2023 financial year. The net effect is that programmes for this period will not be achieved.”

Of the Sh54.7 billion, Sh16.6 billion was spent by the Ministry of Petroleum and Mining on fuel subsidy while Sh4.5 billion was disbursed to the State Department for Crop Development and Agricultural Research for the maize flour subsidy.

The flour subsidy came after Uhuru in June unveiled the fifth stimulus package on food subsidies in order to cushion Kenyans against the high cost of living that saw a 2kg packet of maize flour retailing at Sh100.

“Maize flour shall retail across the entire country at Sh100, down from Sh205 for a 2kg packet, until otherwise directed,” he said.

Uhuru also announced the government’s subsidy on fuel prices amounting to Sh118 billion.

With the subsidies, diesel retailed for Sh140, petrol at Sh159.12 and kerosene for Sh127.94.

Subsidies suspended

The food subsidy, however, was suspended by the government last month, after a cost of Sh144 billion. The fuel subsidy, on the other hand, ended after President William Ruto, in his inaugural speech, said his administration would do away with it. Immediately afterwards, the retail prices of fuel rose to new heights.

According to recent prices set by the Energy and Petroleum Regulatory Authority (EPRA), a litre of petrol will retail for Sh179.30, from the current Sh159.12, while retail price of diesel will be Sh165 from the current Sh140. A litre of kerosene is now going for Sh147.94.

The price of a litre of super petrol, diesel and kerosene increased by Sh20.18, Sh25 and Sh20, respectively.

Apart from fuel and maize flour expenditures, the document from the National Treasury shows that the Office of the President spent Sh810 million in two months, while the State Department for Interior spent Sh125 million for security operations. The Ministry of Defence used Sh2.2 billion on a research hospital, while the National Treasury spent Sh6 billion on Telkom Kenya.

The Department for Infrastructure spent Sh9.5 billion on road construction, the Health Ministry Sh420 million and the State Department for University Education spent Sh139 million for donor-funded projects.

The State Department for Basic Education spent Sh8.1 billion for construction of Competence Based Curriculum (CBC) classrooms following the government’s decision to build 10,000 units in readiness for the 2023 transition of 1.2 million learners to junior secondary school.

Sh120bn shortfall

Apart from the Sh54.7 billion expenditure, the lawmakers were shocked to learn that, in the current Budget, there is a shortfall of Sh120 billion that the National Treasury had planned to redress through a euro bond flotation, but shelved the idea due to high interest rates occasioned by the Russia-Ukraine war.

There are concerns that, due to this cash shortfall, the country will not be able to meet its obligations, leading to more pending bills. There could be additional borrowing at a time when the country’s debt is on an upward trajectory, with PBO warning that by next June the debt could be Sh9.4 trillion against a ceiling of Sh10 trillion.

The MPs present accused the Treasury of failing to disclose the country’s debt status. Dagoretti South MP John Kiarie accused the National Treasury of failure to update the country on the debt status.

Budget problem

“Kenya does not have a debt problem; but has a budget problem. In the last Parliament, the National Treasury just chose to be opaque. If we are not able to know how much we are borrowing, then we cannot be able to budget.”

Kisumu Town East MP Shakeel Shabir regretted that the country does not know what it owns and therefore budgeting is a challenge.

“In this budgetary process, we don’t know what we have and what we do not have. Treasury has become like a king, whatever they tell us to do, they want it done that way, even if we don’t agree with it.”