Minister Ndung’u on the spot due to delayed CDF cash

The government is facing a serious cash crunch and is unable to disburse cash for various development projects, notably bursaries which are distributed through the National Government Constituency Development Fund (NG-CDF).

National Treasury Cabinet Secretary Prof Njuguna Ndung’u, yesterday told Parliament that the government has no money to remit to the kitty before Christmas.

This is the money that MPs are banking on to give bursaries before schools re-open in early January.

Bursaries are critical to the popularity of MPs in their constituencies and on Tuesday, they staged a protest in the National Assembly demanding that the money be released before they go on recess, which is expected to start today and end in February.

According to the Treasury chief, much of the money the government had collected had been spent on combating drought and El Nino rains, which came in succession.

Appearing before the Departmental Committee on Finance and National Planning chaired by Molo MP Kimani Kuria, Ndung’u told MPs that the government had no money to finance their demands.
According to him, the situation was so bad that the Treasury was unable to pay salaries on time and was in arrears.

He also remained non-committal on whether civil servants will have received their December salaries before proceeding for Christmas holidays. The two weather extremes had affected the financial situation of the country, and remitting funds required by various funds would ignite solvency challenges.

While maintaining that the country was doing badly given the debt burden it is facing, the Treasury CS asked lawmakers to be patient as the Kenya Kwanza administration figures out a way to disburse the funds before Christmas.

“We are struggling just to be in the same place. We are facing a serious liquidity crisis but not a solvency issue. If we push it further, we could end up putting in place measures that could ignite solvency problems.

“In one year, Kenya has gone from one extreme which is drought to another which is floods and, in both cases, we have re-allocated recurrent and development budgets to save lives because we have also not been collecting enough taxes.”

He told the MPs that the government was experiencing a liquidity problem.

“But we are working to ensure that before Christmas we will have taken some steps towards addressing the CDF issue.”

The 290 constituencies receive approximately Sh130 million each in NG-CDF funding from the Exchequer. This is the money MPs have been demanding, saying they will not proceed on recess until it is disbursed.

Partial disbursements

Ndung’u, however, told them that President William Ruto’s administration was doing its best to ensure the country does not slide into insolvency.

He also revealed that the government was getting into bilateral agreements with countries that would come support Kenya should need arise. So far, he said, the government has signed Budget support agreements with World Bank and the International Monetary Fund, China and India.

The World Bank in particular said it was finalising on the Sh100 billion that it promised Kenya for budgetary support.

“The liquidity problem is in the short term. We are signing support agreements with other countries that have committed to supporting our Budget. We have had to engage in a delicate balancing act with the available finances,” he said.

He added: “I can assure you that we are working 24 hours to solve this problem.”

His explanations notwithstanding, MPs demanded that he hives off budgets from elsewhere to fund the CDF kitty before the National Assembly proceeds for recess. Committee members also sought to know why the delay in the release of NG-CDF funds had become a common occurrence.

Baringo North MP Joseph Makilap asked the government to re-allocate monies meant for fertiliser subsidy and channel them to NG-CDF as a short-term measure to enable legislators give bursaries to learners who are scheduled to go back to school in January.

“Mr CS, you should explore other options such as a Sh9 billion disbursement sourced from other sections of the Budget so that each constituency gets at least Sh30 million for the bursaries,” Makilap said.

Karachuonyo legislator Andrew Adipo Okuome told the CS that he was becoming very unpopular following his failure to release the funds meant for the kitty.

“We call on the Treasury to do what needs to be done so that children’s bursaries are made available. We cannot risk children not going back to school, especially in the new CBC curriculum where repeating a grade is not possible,” Okuome said. “If we dare proceed for recess without the bursaries, we as MPs will be plunging ourselves into problems with the electorate.”

On Tuesday, MPs paralysed parliamentary business to protest delays by the National Treasury to release funds meant for NG-CDF and the National Government Affirmative Fund (NGAAF).
While chanting “No CDF, No Recess!” the lawmakers accused the National Treasury of lack of transparency in the matter.

So bad was the situation that some of the lawmakers, a majority from the Minority side, formed a buffer line at the entry of the chamber to prevent members from accessing it.

The barricade was meant to deny the National Assembly the required quorum of 50 members which is the threshold set for the House to transact business.