Why public finance management collapsed

Last week, the President signed the supplementary budget after it was approved by Parliament raising heavy concerns as to how a supplementary budget came just four months into the financial year. It has now become a trend to have two supplementary budgets every financial year.

This trend brings to question how these new expenditure items deemed critical to be slotted into the supplementary budget are always left out during the budget’s formulation? Are these expenditures always left out deliberately by the Treasury to shrink the size of the budget during formulation knowing they will introduce them later through a supplementary?

This trend tears into the credibility of our budget making process and its surprising that Parliament is doing nothing to arrest this irresponsibility.

One institution that goes unnoticed because its operations is always shadowed but deserves commendation is the Parliamentary Budget Office. The in-house think-tank has been doing a stellar job in guiding Parliament on budget and appropriation in adherence to the rule of law looking at the reports they present to the National Assembly’s Budget and Appropriations Committee. Unfortunately, Parliament has not lived up to the standards of guidance and advise its own think-tank has set. Reading through the PBO report on the supplementary estimates provided by Treasury and later the report by the Budget Appropriations Committee guided by the think-tank, it’s illuminating about the state of our economy and Treasury’s “abracadabra parte after parte” budget making as the Governor of CBK called it, which is yet to stop.

First, the committee report indicates that national Treasury has indicated that it has already spent Sh1.86 billion but there has been no list of expenditure as provided by Section 43(2) (C) of the PFM Act 2012, which stipulates that budget reallocations made on programmes and sub-votes shouldn’t exceed 10 percent, but 37 programmes out of the 158 programmes exceed 10 percent.

It gets murkier when looking at the Sh1.86 billion figure queried, its in that amount that Treasury was regularizing Sh1.2 billion payment it made to Lake Turkana Wind Power in August without Parliament’s approval then sneaked it it in the supplementary budget.

In its recommendations, the committee neither condemned nor held to account Treasury for this violation and this is after Parliament had frozen all payments to LTWP in that last financial year pending a special audit by the Auditor General. Another shocker is that Parliament chose to give a blind eye to the remaining Sh600million unaccounted for.

So where did Treasury spend this Sh600million and doesn’t want to reveal? Was it embezzled? Second, the committee red-flagged abuse of power by Treasury when it effected budget cuts for Judiciary and Parliament in IFMIS without the approval of National Assembly, the institution bestowed with the powers to appropriate public funds.

This move blatantly undermines the independence of Judiciary and Parliament, but the Committee didn’t recommend surcharging the head of IFMIS and those responsible at Treasury for this executive overreach encouraging more of such violations.

Lastly, just as I had indicated two weeks ago, the committee came to the same conclusion that Kenya’s public debt by the end of the 2019/2020 financial year will be hitting Sh6.7 trillion. Now, the irony is that Speaker of National Assembly just last week turned down a request by Moses Kuria that sought of the audit of the country’s public debt portfolio.

He not only turned down the request but went ahead to give Treasury a thumbs-up for always submitting satisfactory reports and statistics on the country pubic debt status – the protector of the public has now become the publicity of Treasury.

Interestingly, the Parliamentary Budget Office has been calling out Treasury numbers for a period of time now, demonstrating how National Assembly leadership is morally bankrupt and a monumental failure to live up to its constitutional mandate.

It is this dearth of Parliament that has led to the collapse of our public finance management infrastructure and there is no indication of that reality changing anytime soon.