Controller of Budget raises concern on debt

Controller of Budget Margaret Nyakang'o has raised concern over growing public debt, which stands at Sh8.56 trillion.

In a report, the National Government Budget Implementation Review, that covered the first three months of the 2022/2023 financial year, Dr Nyakang'o noted that the debt comprises Sh4.19 trillion owed to external lenders and Sh4.37 trillion borrowed domestically.

The public debt stock increased by 7 per cent, from Sh8.0 trillion reported on September 30, 2021 to the current figure reported on September 30, this year.

The Controller of Budget revealed that the 2022/2023 budgetary allocation towards servicing the public debt stood at Sh1.39 trillion compared to Sh1.17 trillion allocated the previous year. Total expenditure on public debt during the period under review, according to the audit, amounted to Sh236.88 billion. This was higher compared to the Sh204.19 billion recorded in a similar period in 2021/2022.

The National Treasury, it was revealed, has a loan portfolio of Sh1.149 trillion that is yet to be disbursed but has been paying commitment fees. In the first quarter of 2022/2023, the National Treasury reported paying Sh398.54 million in commitment fees.

Nyakang'o said the commitment fees can be avoided by ensuring the government contracts loans when implementing agencies are fully prepared to proceed with implementation.

She added that there is a need to enhance fiscal consolidation by reducing budget deficits and preparing progress reports on projects financed from debt to strengthen oversight.

The audit further revealed a low uptake of the budget whose gross expenditure stood at Sh697.10 billion. The low uptake of the budget in the period was attributed to the anticipated rationalisation of budget allocations by the new administration, which delayed the implementation of planned budget activities.

"The delays were also informed by the General Election of August 2022, which saw a period where there was delayed disbursement of funds by the National Treasury," reads the report.

To enhance budget implementation, the Controller of Budget recommended that in the remainder of the financial year, the Executive should fast-track and finalise the budget rationalisation to create certainty in budget implementation.

The national government development expenditure, as per the audit, recorded a 29.6 per cent decline from Sh112.1 billion spent in the first three months of 2021/2022. This was attributed to low development activities due to the elections.

Controller of Budget said the highest development expenditure included Capital Transfers by ministries, departments, and agencies in the form of subsidies, grants, or direct transfers to Semi-Autonomous Government Agencies (SAGAs) of Sh61.64 billion, followed by refurbishment of buildings, infrastructure, and civil works at Sh2.81 billion.

A review of the recurrent expenditure showed that a total of Sh130.89 billion was spent on compensation for employees.

The Teachers Service Commission, according to the audit, recorded the highest expenditure on compensation for employees at Sh68.34 billion, translating to 19.2 per cent of the gross recurrent expenditure.