Budget Chief Agnes Odhiambo urges prudent management of public funds

By WINSLEY MASESE

The government has been urged to check its ballooning recurrent expenditure, as this will put a stop to the country’s economic growth prospects.

This is compounded by imprudent spending by the counties and rising demand for increased salaries by civil servants, the latest report by the Office of the Controller of Budget indicates.

During the 2012/2013 financial year for example, the recurrent expenditure stood at Sh922 billion against Sh212 billion on development expenditure and 9.8 billion on the counties. The government relies on domestic tax and during the period, the taxman collected Sh759 billion against a target of Sh845 billion. To bridge the deficit, the government borrowed internally a total of Sh76 billion, down from Sh79.4 billion compared to the previous period.

Public debt

Increased borrowing, the report adds, increases the public debt that currently stands at Sh1.91 trillion, an equivalent of 50.6 per cent of the country’s GDP.

“With the operationalisation of County Governments under the devolved system of governance, there is a rising trend in recurrent expenditures which will hamper budget implementation especially on the development agenda,” Controller of Budget Agnes Odhiambo warned.

 To reverse the trend, Odhiambo urged the government to come up with mechanisms to improve revenue collection while instituting cost cutting measures to address the dependence on borrowing as this attracts high costs such as interest payments.

 “Borrowed fund should be channelled towards development activities aimed at fostering economic growth. Control expenditures on non-core activities and seal all the revenue leakages at the national and county level,” she advised.

 The report indicates that during the 2012/2013 financial year, the taxman collected 759.5 billion from local tax against a set target of Sh845 billion. To bridge the deficit, the government had to borrow from the domestic market.  With the on-going recruitment of personnel in the counties, she warned that failure might lead to waste of government resources.

The Institute of Certified Public Accountants of Kenya (ICPAK) has called for a restructuring of the public service. “There is need for a collective assessment of government structures and not piecemeal reforms,” said Caroline Kigen, the the institute’s Chief Executive.