State’s spending of Covid loans queried
By Frankline Sunday | August 6th 2021
The National Treasury has come under the spotlight over opaque budgeting and disbursement of money borrowed to fight Covid-19 effects on the economy.
A new report from the International Budget Partnership (IBP) indicates the government spent tens of billions of shillings from loans borrowed in the 2019/2020 financial year without properly accounting for the same, raising questions on whether the funds were used for the intended purposes.
“With the haste in mobilising resources and adjusting budgets while concurrency spending/utilizing Covid-19-related resources, it is possible to have the lines of transparency and accountability blurred,” says IBP in the report.
The report analyses financial documents, including those from the National Treasury, Controller of Budget and Auditor General, and found that the government raised Sh215 billion in the first four months of the pandemic, the majority in the form of loans, to deal with Covid-19.
In addition to this, 73 per cent of all the public debt that Kenya incurred in the 2019/2020 financial year was borrowed in the second half of the year, corresponding with the onset of the pandemic. However, IBP says this is not unique to the last financial year as more than 70 per cent of public debt in the previous three years was incurred in the second half of the year.
“A closer look at the previous years shows that the government has overshot its borrowing target each year under review,” explains the report.
“This overshooting of borrowing against approved targets has been growing gradually across the year. Therefore, as Covid-19 forced the government to review its targets upwards, this had been a way of operating on matters debt even before the pandemic.”
The report also cites lack of comprehensive and accurate information in the financial statements provided by the government as a barrier to accountability, with the Treasury failing to publish the third supplementary programme-based budget as stipulated in the Public Management Finance Act, 2012.
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