The government did not spend more Sh37 billion allocated to its functions in the 2010-11 financial year, audited reports have revealed.
This is a dismal performance as compared to the previous year which had more than Sh25 billion in expenditures depicting the overall financial position of the government.
It was an increase of Sh11 billion or 44 per cent of the previous year. 44 government ministries failed to absorb Sh26 billion in 2010-11 as budgeted for by the National Treasury, an improvement of net under expenditure of Sh54 billion that was recorded in the previous year.
However, three ministries used more than Sh700 million. Sh362 million of this amount was spent without the approval of the National assembly.
Treasury Cabinet Secretary Henry Rotich told the Public Accounts Committee of the National Assembly that the money for government functions was part of the more than Sh830 billion paid to the consolidated funds but only Sh828 billion is in the public coffers.
He attributed the loss to “cash flow leakages”. The Sh830 billion was realised through an increase of 19 per cent in the revenue collection of Sh632 billion up from Sh529 billion.
Rotich attributed the low expenditure to slow implementation of projects and inadequate exchequer issues, failure by errant accounting officers to approve payments, delayed disbursement of donor funds and failure of development partners to submit expenditure returns.
The Cabinet Secretary, however, warned that the errant officers will be surcharged and fired if they fail to approve the projects budgeted for.
“We have been relying on the circulars to issue memos regarding failure to approve payments. But now that we have the Public Finance Management Act in place, our circulars will be legally backed and anyone who fails to toe the line will face the consequences,” he said.
Rotich said Treasury will propose a Bill in the National assembly which will address absorbing of funds as contained in the constitution.
Committee chairman Ababu Namwamba questioned why he was repeating the same answers previously submitted to the committee by his predecessors.
“You are using exactly the same words used to answer this committee 12months ago. The response is generic because what you have given was captured by the committee last year and it is not a good practice to repeat things,” he said.
“It is a 'cut and paste' response that shows lack of seriousness in Treasury. It raises serious concerns as to what the Treasury is doing to address the challenge of absorption of budgeted funds.”
International financial institutions have shown that Kenya ranks low in the absorption of funds from her development partners.
Deputy Auditor General Alex Regeru warned that unless the trend ends, the country will have a financial crisis compounded by underdevelopment.
“We are competing for these funds at a global level and if we are not ready to absorb them, it will be bad for the country’s development programme. The resources that are supposed to help the common wananchi are being taken back to Treasury," he said.
The committee also heard that more than Sh8 billion in bills is still pending. Rotich said the Pending Bills Closing Committee that was appointed by retired President Kibaki in 2003 handed its report to the committee last week.
He said the committee was handling bills from the 1980s and its mandate will be concluded by the end of this year.
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