Casual approach to budget-making faulted

GRAPHIC | JOY ABISAGI

What you need to know:

  • The Treasury’s 2015 Budget Review and Outlook Paper cautions that mini budgets need to be restricted to emergencies.
  • Still, the matter pointed at discrepancies within the government. The world over, best practice is increasingly critical of multiple supplementary budgets.
  • In the United Kingdom, a supplementary budget can only be presented once every year, in February, since the 2011/2012 budget year.

Kenya’s public finances would be better served by a stricter approach to supplementary budgets and the spending of funds only after parliamentary approval, an analysis by Nation Newsplex has established.

Parliament is set to pass a supplementary budget that will increase the 2015/2016 Budget by Sh26 billion.

Of this figure, said Treasury Cabinet Secretary Henry Rotich in a meeting with the liaison committee of the National Assembly last week, Sh18 billion had been spent or reflected in the Integrated Financial Management Information System. The money will be released as soon as Parliament approves the estimates.

“With this idea of unabsorbed funds going to the recurrent budget, you’re feeding the inflation of recurrent expenditure, which is the path we are on right now.”

A supplementary budget is a request to Parliament for additional spending of public funds after the budget has been passed.

The law says the government may spend money that has not been approved by Parliament if the amount already authorised is insufficient or if the money comes from the contingency fund.

But Mr Rotich said were Article 223 to be adhered to in its exact wording there would have to be a supplementary budget every two months in a financial year, bringing the total to six.

“That is probably something we need to discuss,” he said.

RESTRICTED TO EMERGENCIES

Kenyan laws do not state the number of supplementary budgets that may be prepared in a financial year.

Meanwhile, lack of transparency in passing the mini budget has been criticised. Dr Jason Lakin, the country manager of the International Budget Partnership, said: “At a minimum, the public should be able to see what we are discussing.”

“After allowing for all this process, for people to engage and discuss and go back and forth and separation of powers and so forth to come up with the original budget, we then have this opaque process by which the supplementary can be done,” he added.

Section 44 of the law on public finance management does not require specific explanations as to why funds being sought in a supplementary budget were not foreseen and provided for in the original budget.

The Treasury’s 2015 Budget Review and Outlook Paper cautions that mini budgets need to be restricted to emergencies.

“Such changes may be construed to mean that budgets are not credible, that is, they are not being planned well, implemented as planned or there are cases of policy reversal by the government,” says the paper.

According to development economist Anzetse Were, the right solution to poor budget absorption is not to increase recurrent expenditure but to improve use of budget funds.

“With this idea of unabsorbed funds going to the recurrent budget, you’re feeding the inflation of recurrent expenditure, which is the path we are on right now,” said Ms Were.

DISCREPANCIES WITHIN GOVERNMENT

Within the liaison committee, there have been signs of a disconnect within government.

Justice and Legal Affairs Committee chairman Samuel Chepkong’a said in meetings with ministry representatives that some principal secretaries professed ignorance when asked about the mini budget.

In the Lands Committee, ministry officials wanted the Sh1.25 billion paid to Mr Evanson Waitiki for a farm given to squatters in Likoni reallocated to the National Titling Centre.

When the Witness Protection Agency met the Legal Affairs team, said Mr Chepkong’a, it was not aware that Sh11 million had been taken from their budget. The Sh11 million was for their June salaries.

That was a surprise, said Mr Rotich, adding: “There is no ministry that was not invited to the Treasury to review their budget.”

Still, the matter pointed at discrepancies within the government. The world over, best practice is increasingly critical of multiple supplementary budgets.

In the United Kingdom, a supplementary budget can only be presented once every year, in February, since the 2011/2012 budget year. Other mini budgets, known as out-of-turn supplementary estimates, can only be produced in the “most exceptional” circumstances.

The United States does not use supplementary budgets; rather, individual requests for funding, “supplementals”, are presented by the President.

Recent requests were triggered by an increase in migrants, military spending, forest fires, Ebola in West Africa and Zika virus.

Additional reporting by John Ngirachu