Ministries on the spot for under-reporting State revenue

KENYA: Several Government ministries and agencies failed to remit billions of shillings of internally generated cash to the Treasury in the first half of this financial year.

The Quarterly Economic and Budgetary Review covering the first-half of 2013/14 shows that collections of ministerial Appropriations-in-Aid (AIA) or internally generated funds recorded an under-performance of Sh19.4 billion for the first half of the current financial year.

“Part of the shortfall in Appropriation-In-Aid collection is explained by the delay in information on collections by a majority of the ministries, departments and universities,” Treasury says.

For the six months to December 2013, the Government received Sh14.289 billion in AIA against a target of Sh33.684 billion, a shortfall in revenue that heavily hit implementation of budgeted programmes.

“Under-reporting of AIA has been a major issue. But we will get the actual expenditure returns at the end of the financial year when the books are audited,” National Treasury Cabinet Secretary Henry Rotich told Weekend Business.

Controller of Budget Agnes Odhiambo has already raised the alarm over failure by several ministries and agencies to account for the collections. 

Non-remittance of funds could open loopholes through which billions of taxpayers’ funds are lost or mismanaged.

Ms Odhiambo said incomplete expenditure returns by the ministries, departments and agencies (MDAs) affected the smooth implementation of the budget during the first three months of July to September in the 2013/2014 financial year.

She said a number of MDAs had more expenditure than Treasury issued during the period under review.

For instance, the Ministry of Transport and Information sector spent a colossal Sh4.6 billion against a Treasury release of Sh700 million, while Education, Science and Technology spent Sh25.8 billion against a release of Sh20 billion.

exchequer release

Others include Defence, which spent Sh16.6 billion against a Treasury release of Sh14.7 billion, Environment, Water and Natural Resources which spent Sh2.3 billion against an exchequer release of Sh2.1 billion and the mining sector, which spent Sh30 million against Sh10 million.

Land, Housing and Urban Development spent Sh900 million against a Treasury release of Sh500 million, while the Witness Protection Authority spent Sh40 million despite not having been allocated any Treasury release.

The latest concern also comes amid growing suspicions over the basis of the Sh797 million found to have been over-spent in payment of debt, pensions and salaries for constitutional office holders.

“Financial reports submitted to the Controller of Budget do not provide complete information on how much is collected as AIA,” said Odhiambo, adding, “ Failure to disclose AIA affects the accuracy of the expenditure reports.

“To ensure accuracy of the quarterly financial reports, MDAs should report all AIA collected during the period,” she said.

“The pension returns 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.”

This also comes at a time when Treasury is cash-strapped as revenue collection fell short of target. Already, Treasury has suspended a number of projects such as the implementation of the new Civil Servants Pension Scheme, and cut down on wasteful spending, especially foreign travel and hospitality.

Treasury data shows that as at the end of December 2013, total revenue collection, including AIA, was below the target by Sh29.8 billion.