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State House cars budget up 10 times as debt cash flows

By Dominic Omondi | June 26th 2020

President Uhuru Kenyatta arrives at Harambee House, Nairobi, to address the nation on the coronavirus pandemic. State House was allocated Sh23 million for the purchase of vehicles, but the budget was revised to Sh220 million. [File, Standard]

The State House budget for cars rose almost 10 times with the National Treasury allocating it Sh220 million with only five days to the end of the current financial year.

Initially, Sh23 million had been set aside for purchase of vehicles and other transport equipment for State House, but this has since been increased following the flow of money in the third supplementary budget tabled in the National Assembly on Wednesday.

At the beginning of the year, only Sh8 million had been earmarked for spending on cars and transport equipment.

The law allows an accounting officer to spend more than what had been approved by the National Assembly. However, the Cabinet Secretary for National Treasury has to seek the approval of National Assembly for such excess spending.

“If an accounting officer finds, after Appropriation Accounts are completed, that he has spent more than the total vote, that Accounting Officer shall seek parliamentary approval through the Cabinet Secretary for that Excess Vote,” reads part of the Public Finance Management Act, 2012. The spending on new cars in the current financial year is more than twice what State House spent in the last year. In 2018-19, the budget for the presidency for the purchase of cars and other transport equipment was Sh102.85 million.

Other development projects at State House, including rehabilitation of civil works, have had to be sacrificed to free up money for the purchase of cars. In total, the presidency’s development budget went up by Sh218 million.

Development expenditure is funded mostly using borrowed cash. By April, various development partners had approved disbursement of cheap loans of more than Sh212 billion. Most of the money was supposed to help the country tackle the adverse health and economic effects of the Covid-19 pandemic.

Loans and grants

With tax revenues declining due to limited economic activities occasioned by the stringent containment measures, the government has relied more on loans and grants from well-wishers.

With only five days to the end of Financial Year 2019/20, it is possible that Treasury is only rationalising what ministries, departments and agencies had already spent.

It is not the first time the Treasury is bringing a supplementary budget towards the end of the financial year. Last year, former Treasury CS Henry Rotich brought to Parliament a mini budget for financial year 2018/19 on June 10.

This is National Treasury Cabinet Secretary Ukur Yatani’s third supplementary budget. Additional cash in the third supplementary budget will also be used to revamp the country’s arsenal in the fight against the pandemic, with Treasury setting aside an additional Sh6.35 billion for the fight against the coronavirus disease.  

The Interior ministry has also been awarded an extra Sh1.5 billion to purchase equipment for contact tracing of Covid-19 victims. By yesterday, Kenya had reported 5,206 cases, out of which 130 people have succumbed to the respiratory disease. More than 1,800 people have recovered from the disease.

The government has a twin task of containing the spread of the disease without hurting the economy. In total, the government is expected to spend an additional Sh14.8 billion, which will inflate the budget in a year that the Kenya Revenue Authority is expected to struggle to hit its tax collection target due to muted economic activities. Recurrent expenditure - salaries, pensions, payment of interest on debt, and other administrative costs - has been allocated an additional Sh8.85 billion, taking its tally to Sh1.07 trillion from an earlier estimate of Sh1.069 trillion. Development spending will get an extra Sh5.98 billion.

Big Four agenda

The government is expected to spend Sh465.8 billion on capital generating projects in the current financial year.

Given that the financial year is already in its tail end, it is possible that all that Treasury is doing is re-align the expenditure. However, spending on Big Four Agenda has lost Sh1.8 billion, which will be used for the construction of social housing units. The power line from Lolyangalani to Suswa has been allocated an additional Sh1.16 billion.

The Ministry of Defence will get an additional Sh1.9 billion in the latest mini budget that comes just a few days to the end of the current financial year on Tuesday.

In the next financial year starting July 1, Treasury is expected to spend Sh2.76 trillion as the government moves to stimulate the economy by helping businesses find their footing and create jobs.

Yatani had in the second parliamentary budget allocated Sh40.3 billion for Covid-19-related expenditure. By April, he had disbursed Sh18 billion towards coronavirus interventions. The money, said Yatani, had been released to boost the health sector, dig boreholes in slums and fund cash transfers to the elderly and other vulnerable groups.

Other beneficiaries in the second supplementary budget were maize farmers who are to benefit from an allocation of Sh10 billion for the Strategic Grain Reserve to be used for replenishing national silos in preparation for tough times ahead.

An additional Sh10 billion was also set aside for cash transfers to the elderly as well as people with disability.

The government has been disbursing cash to people in the slums, with reports indicating that low-income households have been receiving a monthly stipend of Sh2,000.

Most of the money will be used to deal with the coronavirus pandemic and to cushion the vulnerable population against the adverse effects of the virus, including massive job losses.

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