5 July 2014

Kenya: IMF Asks Parliament to Check Budgetary Spend

The IMF has asked Parliament to tighten its oversight role on use of public funds at national and county government levels, lest the country loses momentum in economic growth.

The International Monetary Fund aired concerns with the National Assembly and Senate speakers on Friday over the burgeoning recurrent expenditure at the cost of development projects.

IMF's Africa assistant director Mauro Macagni warned that "if the recurrent expenditure is not controlled, it will crowd out funds for development".

He asked Parliament to ensure use of "all public funds" is subjected to the existing legal and budgetary framework through accountability to the public.

"You must protect the republic against (budgetary) leakages," Macagni told speakers Justin Muturi and Ekwe Ethuro in a joint meeting at Parliament Buildings.

"Deciding the most important priorities is up to the Parliament. You need to know and be informed periodically on these resources to ensure they are well accounted for."

Referring to a quarterly report by the Office of Controller of Budget for the nine-month period ended March 31, the IMF official said it was alarming that the 47 counties, for instance, spent only 14 per cent on development of the Sh210 billion allocated to them in the 2013/14 year.

Macagni said this was contrary to the Public Finance Management Act 2012 that roots for at least 30 per cent of the total budget be spent on development projects.

The CoB report also revealed that spending on travel, entertainment and new vehicles by the national government stood at Sh7.4 billion contrary to a March 7 directive by President Uhuru to cut down on such spending.

This included Sh1.58 billion on foreign travels, Sh3.59 billion on domestic travels, Sh1.32 billion on hospitality and Sh885.76 million on new vehicles.

Members of county assemblies have been castigated for spending an estimated Sh2 billion on foreign trips alone - a matter that the Senate's County Public Accounts and Investment Committee has ordered Auditor-General Edward Ouko to investigate.

Ethuro however said that the Senate would only act on under-spending on development at the counties after the Controller of Budget Agnes Odhiambo releases a report for the full fiscal year to June 30.

"As Senate, we are equally concerned especially on travels abroad because the country has all the resources that the counties are going to seek in other countries," he said.

"But as regards development expenditure, we have to wait for the full-year report rather than rely on an interim report covering only up to March."

Macagni advised that counties should be barred from engaging in public-private partnerships without the approval of the National Treasury just as is the case in seeking funds through debt instruments. "PPPs are very complex arrangements that if you don't have capacity, you can easily be taken for a ride," he said.


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