State officials gobble up billons on trips and hotels

Controller of Budget Margaret Nyakang’o says much of the spending was within the four months of lockdown. [File, Standard]

Public servants spent billions of shillings on foreign trips, entertainment and hotels at the height of the Covid-19, despite the key restrictive measures in place.

In foreign travel alone, public servants spent Sh1 billion in the six months to December 2020, when most of the countries had instituted lockdowns.

In her National Government Budget Implementation Review, the Controller of Budget, Margaret Nyakang’o, showed that much of the spending, estimated at Sh628 million, was spent within the four months of lockdown, when international travel was banned - between July and September 2020.

However, the foreign expenditure in the first-half of the current financial year ending June 2020, was a drop of 68.7 per cent. In the same period in Financial Year (FY) 2019-20, Ministries, Departments and Agencies (MDAs) spent Sh3.18 billion to travel outside of the country.

After four months of being grounded, domestic commercial and passenger flights resumed on July 15, while international travel resumed on August 1.

Dr Nyakang’o’s report showed State officials spent Sh1.9 billion on hospitality at a period when hotels and restaurants remained largely closed in compliance with the safety and health guidelines issued by the Ministry of Health.

Budget execution

The expenditures, although largely reduced, point to the State’s profligacy at a time when revenues have dwindled due to the adverse effects of the pandemic.

Some of the other issues that were flagged as having hampered effective budget execution include delays in disbursement of the exchequer issues to MDA’s and county governments, high level of public debt and the effects of the pandemic on the economy.

“The National Treasury should ensure exchequer issues to MDAs and counties are released as per their annual work-plan and cash flow projections,” said Nyakang’o.

To reduce the debt burden, she advised the National Treasury to take appropriate measures to enhance domestic revenue mobilisation.

“Finally, the government should monitor and review the measures instituted to address the impact of the Covid-19 pandemic on the economy and take actions aimed at protecting lives and supporting businesses to enhance economic productivity.”

The performance in budget implementation during this period slow compared to a similar period in FY 2019-2020.

Receipts into the Consolidated Fund, national government’s bank account at the Central Bank stood at Sh1.20 trillion, which was 42.5 per cent of the annual target, recording a decline compared to Sh1.25 trillion received in a similar period of the FY 2019/20 (47 per cent of the annual target).

“The decline could be attributable to low economic activities occasioned by the measures introduced by the government in mitigating the spread of the pandemic,” she said.

The effects on economic activities included loss of employment due to closure of businesses in the manufacturing and hospitality industries, a decline in foreign trade volumes, reduction on Value Added Tax from 16 per cent to 14 per cent, Pay as You Earn and Corporate tax from 30 to 25 per cent, among other tax measures.

Exchequer issues to MDAs and counties in the reporting period were Sh1.18 trillion representing 42.2 per cent of the net estimates.

This comprised of Sh139.35 billion for development expenditure, Sh917.40 billion for recurrent expenditure and Sh123.96 billion towards county governments representing 35.9 per cent, 43.8 per cent and 39.2 per cent respectively.