Kenya stares at Sh180bn cash shortfall from foreign donors

PHOTO | FILE Energy, infrastructure and ICT industries were the worst hit owing to low absorption of funds allocated to the respective ministries, incurring a total expenditure of Sh57.2 billion by March this year against a target of Sh104 billion, a new report by the controller of budget notes.

What you need to know:

  • Treasury has so far received 23 per cent of the Sh233.8 billion it expected from donors in the current financial year

Kenya has only received a quarter of the funds it expected from donors in the 2012/13 financial year to help fix a growing budget deficit.

By March, the Treasury had received Sh53.7 billion against a Sh233.8 billion target, representing 23 per cent of the budgeted funds. A new report from the controller of budget released last week said the deficit is one of the biggest impediments to the country’s growth.

“The low disbursement of funds to ministries, departments and other government agencies will undermine economic growth,” controller of budget, Ms Agnes Odhiambo, said.

The Treasury fell short of disbursing Sh68 billion requested by ministries over the last nine months, negatively affecting the roll-out of several government programmes.

But the budget controller pointed an accusing finger at the country’s laborious public procurement procedure, blaming it for slow absorption of funds.

The report also noted that out of Sh37.8 billion allocated to paying pensions in the current fiscal year, only Sh18 billion, almost half of the allocation has been paid out while a whopping Sh2.4 billion remains unspent.

In the 2011/12 fiscal year, ministries returned over Sh101 billion, a tenth of the Sh1.1 trillion budget to the Treasury in unused development funds.

“Lengthy procurement processes exacerbated by inaccurate cash flow projections contributes to delays in budget implementation,” Ms Odhiambo noted.

The survey further said that the government is wastefully spending billions of shillings financing domestic and foreign trips by ministries, various government agencies and departments.

Over Sh18.1 billion has been spent in on travels by ministers and other government officials at the expense of development.

The budget controller said that the government needs to rationalise expenditures on such activities especially those that do not have any growth significance to the country.

Substantial amount

“This is a substantial amount allocated to these activities, some of which may not be directly contributing to economic development,” said the budget implementation review report.

The survey indicates that, at the same time, the Treasury disbursed Sh151.4 billion towards various development activities in the country, while Sh416.7 billion was consumed in recurrent expenditures by ministries.