Kenya’s Treasury blames Parliament’s cash crisis on late requests

National Treasury PS Kamau Thugge when he appeared before the Senate Public Accounts Committee at Parliament

NAIROBI: Treasury bosses have blamed Parliament for the delayed disbursement of funds that led to the power disconnection last week, as they fought claims the State was broke.

National Treasury Principal Secretary Kamau Thugge has said the Parliamentary Service Commission (PSC) delayed in submitting cash request last month.

MPs salaries were delayed in September while Kenya Power disconnected electricity supply to Parliament last week over unpaid electricity bills, stoking fears that the State was running out of funds.

“Their finance officer sent us their salary request on September 28 and we received it on the 30th,” Dr Thugge said on Friday, adding that typically, such requests for disbursement are received by the 21st of every month.

The delayed cash request from the State coffers meant that the power bills were not paid on time, leading to the disconnection and subsequently widespread concerns that the government was actually broke.

“I guess they wanted to combine the salary request with that of sitting allowances, which would typically be sent at different times; salaries first then allowances later after the month has lapsed.” Thugge said the power disconnection at Parliament buildings was irresponsible on the part of the PSC since that was an internal matter that should have been handled more amicably to avert the power disconnection.

Kenya Power grants its post-paid customers more than two weeks to settle their bills, suggesting that the power disconnection may have been prompted by unpaid bills spilling over from August or even before.

It was unlikely that the disconnection in the first week of October was over the September power bills. President Uhuru Kenyatta’s Chief of Staff Joseph Kinyua, who happened to be in Parliament, had to intervene to have the power connection restored.

Fears that the State was broke has grown since the month-long teachers’ strike.

An estimated Sh17 billion would be required to meet the enhanced salaries for teachers, which could not be found.

Uhuru maintained the State could not afford the pay hike awarded by the courts, in a long-running battle that is still playing out in the corridors of justice. His fears were grounded on the possibility that granting the teachers a pay rise would stoke similar demands from other public workers to worsen the already unsustainable wage bill for government employees. “I can’t borrow to pay salaries. We do not have the funds,” Uhuru told reporters at State House.

Apart from the delayed disbursement to Parliament, other crucial expenditure including funding of county governments and schools have also been delayed or no funding coming through altogether to compound the broke narrative.

SHORT-TERM LOANS

But in what could possibly be the strongest pointer that all is not well at the National Treasury, the government has borrowed short-term loans through Treasury bills at rates higher than 21 per cent — as was the case in this week’s T-bills issue.

In response to the soaring borrowing rates, Thugge said an emergency decision was taken to borrow from commercial banks through a syndicated loan worth Sh77 billion from Standard Chartered, CFC Stanbic and Citi Bank. The last time Kenya borrowed cash through a syndicated loan was also to solve another crisis of settling an international court order.

Revenue collections have fallen behind government expenditure, creating a funding hole that could well be interpreted as drying cash for the State. Kenya Revenue Authority collected about Sh12 billion less than its target in the July to September quarter, Thugge said, prompting a crisis meeting Friday.

KRA has said it was tightening all possible revenue leakages to meet the rising demand for cash by the government, with plans to go after boda boda operators, small scale farmers and even Small and Medium Enterprises.