A new report by the Controller of Budget Margaret Nyakang’o has shed light on the ongoing wastage in Government, fueled by a frenzy of luxury travels, fuel guzzlers, and unused idle billions even as some senior government officials make claims that the government is broke.
This report highlights the paradox of extravagant spending and wastefulness, despite claims of financial instability and the need for increased tax revenue and borrowing.
Specifically, the report reveals that the government’s budget for luxury foreign travel has increased by almost a third in the first three months of the 2023/24 financial year, from July to September. This contradiction raises concerns about the ruling administration’s priorities at a time that calls for austerity measures.
“Sh4.3 billion was spent on domestic and foreign travel, while Sh1.04 billion was spent on hospitality,” says the new report examining the expenditures of the Kenya Kwanza administration in the first three months of the 2023/24 financial year between July and September this year.
The report notes that compared to a similar period in the Financial Year 2022/23, travel expenses increased by 27.6 per cent from Sh3.37 billion to Sh4.30 billion.
“The Controller of Budget recommends that the National Government reduces expenditure on non-core items, including travelling expenses, in FY 2023/24,” says Ms Nyakang’o.”
“The savings should then be channeled towards addressing the cost of living for Kenyans and other priority programmes.”
Dr Patrick Muinde is categorial wasteful spending and budgeted corruption are our bane. He opines the basic rules of economics dictate that when the economy is struggling the best thing to do is trim spending, avoid waste, and put money in the right projects.
“When its (economy) struggling the basic response is to leave money in the hands of citizens so they continue spending. When you take the money to foreign trips you are taking blood from an already bad situation,” he said in previous interview.
Last week, there was growing concern regarding the expenditure priorities of the Kenya Kwanza administration after the Government stated that it had been forced to manage its finances carefully due to financial difficulty.
The announcement made by National Treasury Cabinet Secretary Njuguna Ndung’u signaling the Government is broke has raised questions among analysts with a keen eye on the Government’s priorities, particularly due to the sustained extravagant lifestyles of State officers.
Prof Njuguna Ndung’u revealed these concerns while appearing before the National Assembly Finance and Planning Committee, where he had a difficult time explaining why Treasury is unable to allocate funds for the National Government-Constituency Development Fund (NG-CDF) amidst the loud protests from Members of Parliament.
“NG-CDF will be released as soon as the government has enough funds, at the moment we are not getting taxes as required and the government is having challenges paying salaries, so please bear with us, we are working around the clock to make things work,” he said.
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Despite Ndung’u’s explanation to MPs that the financial crisis is a consequence of natural disasters such as prolonged drought and El Nino rains, which has caused government to divert funds, decreased tax revenue, and a global economic downturn, the warning signs have been evident for several months, analysts said.
The government’s economic strategies, including tax hikes to generate funds, have attracted scrutiny with restless Kenyans piling pressure on the Ruto administration to address the runaway cost of living.
This is not the first time the National Treasury has encountered such difficulties, as civil servants’ salaries have already been delayed twice since January and the Controller of Budget is now recommending an end to wastage.
“The Controller of Budget recommends prioritising budget cuts for non-essential expenditures, inefficient programmes and projects with a low socio-economic impact,” says the report by the Controller of Budget Ms Nyakang’o.
“Specifically, reducing allocations to non-critical infrastructure projects, streamlining administrative costs, and optimising subsidies through targeted interventions can help minimise deficit financing and promote fiscal sustainability.”
According to the Controller of Budget, money allocated for development that was not absorbed ran into billions of shillings in the first three months of the financial year.
“In the first three months of the FY 2023/24, overall national government budget absorption was Sh784.18 billion (18.6 per cent) against the targeted rate of 25 per cent,” says the report.
This comprised Sh83.70 billion (10.4 per cent) for ministerial development expenditure, 320.70 billion (20.5 per cent) for ministerial recurrent expenditure, and Sh379.79 billion (20.7 per cent) for Consolidated Fund Services.
“Analysis of reports submitted for the first three months of FY 2023/24 by Ministries, Department, and Agencies to the Controller of Budget attribute low absorption of budget to delay in uploading Procurement Plans into IFMIS and disbursement of funds by the National Treasury,” said Ms Nyakang’o.
The Controller of Budget recommends that the National Treasury streamlines the funds’ disbursement cycle so that ministries, departments, and agencies know when funds will be released as per the approved work plans.
“In addition, Accounting Officers ensure compliance with various National Treasury Circulars and other regulations to minimize non-essential expenditure and timely payment of pending bills/carryovers,” she said.
In June, President William Ruto committed to tackle corruption, wastage, inefficiency and negligence in government, which, he said are serious threats to the realisation of his Bottom Up Economic Transformation Agenda (BETA).
At the time, he was commenting on the subject of maize flour and fuel subsidies that the Uhuru Kenyatta administration had granted, which the President said had dug the country into a debt hole due to excess borrowing.
“We must admit that we had been living large and way beyond our means as a country. The time has come to retire the false comforts,” he said.
He instead said he would subsidise fertiliser to increase food yields as a long-term, sustainable solution to the high cost of living.
During his campaigns and after his election, Ruto vowed to reduce foreign borrowing, saying debt shall be a “last resort” in raising funds to plug holes in the budget.
He promised not to make Kenyans “slaves” of debt from any place or any country.
It is the same reason he gave for imposing various taxes and raising VAT on fuel to 16 per cent from 8 per cent, which has been cited as the single-most contributor to the high cost of living.
He said the high taxes were necessary for his administration to fulfill the many pledges, chief among them, growing the economy, reducing the cost of living and addressing unemployment.
However, more than one year after coming into office, his administration appears to be backpedaling on the campaign promises, analysts said.
From perceived extravagant spending on travel, purchase of high-end vehicles for senior officials, and sustained appetite for borrowing, many of his pledges remain unfulfilled, they said.
An order on austerity measures across government, including on trips and budget cuts has been largely ignored.
Several government agencies controlling multibillion-shilling State contracts also continue to defy President William Ruto’s order to slash hospitality budgets to curb wastage.
A spot check by The Standard shows several State agencies are still engaging in non-essential spending on such goods and services as the provision of cut flowers and lunches, against the President’s directive through the National Treasury.
President Ruto had last November tasked the National Treasury to begin planning spending cuts on non-priority items to tame the country’s huge budget deficit.
“I have instructed Treasury to work with ministries to find savings of Sh300 billion in this year’s budget,” said Dr Ruto in his maiden speech as President to the National Assembly.