A sobering report from the Office of the Controller of Budget has illuminated the dire financial situation facing the Kenyan government. According to the report, 83 per cent of all revenues collected have been allocated for debt repayment, casting a shadow over other essential government programs.
Controller of Budget, Margaret Nyakango, delivered this grim assessment while appearing before the Budget and Appropriations Committee. She emphasized that out of the Sh4.18 trillion budget for the 2022/23 Financial Year, the overwhelming majority, 83 per cent, would be channelled toward servicing public debt, leaving a meagre 17 per cent for vital government initiatives.
This unsettling revelation means that the government is compelled to continue borrowing to sustain its operations. Nyakango revealed, “The debt as of 30th June is Sh10.25 trillion, surpassing the legal limit.”
The 18 per cent surge in public debt adds pressure on the exchequer, necessitating additional funds to meet obligations that include settling the Sh5.42 trillion external debt and Sh4.83 trillion domestic debt.
Despite the Kenya Revenue Authority (KRA) setting an ambitious target of Sh2.7 trillion in collections by the end of the 2023/24 financial year, a significant portion of these collections will be earmarked for debt servicing.
Public Expenditure
Nyakango also raised concerns about public expenditure at both levels of government, particularly the burgeoning recurrent expenditure that siphons substantial public funds. For instance, out of the Sh3.6 trillion allocated to the national government, 38 percent, equivalent to Sh542.46 billion, is allocated to salaries, allowances, contributions, and staff wages.
Foreign travel expenses have also come under scrutiny as a major drain on public finances. Despite a memorandum from the Head of Public Service limiting official travel for government officials, the Controller of Budget disclosed that State officers incurred Sh20 billion in foreign and domestic travel expenses.
The National Assembly emerged as the highest spender in this regard, with Sh4.8 billion spent on local travel and an additional Sh1.5 billion on foreign travel. Hospitality expenses amounted to Sh8.6 billion, with the Office of the President leading the spending at 2.34 percent, closely followed by the Independent Electoral and Boundaries Commission (IEBC) at Sh2.1 billion.
Despite President William Ruto’s directive to counties to settle approved pending bills to stimulate the circulation of funds and boost the economy, pending bills have instead increased from Sh685.62 billion to Sh727.74 billion. Given the current circumstances, this trend is unlikely to reverse in the near future.
Nyakango emphasized the need to scrutinize loans in relation to the projects they funded to ensure value for money. She also suggested that the National Treasury explore alternative currencies for fund acquisition to alleviate pressure on the depreciating Kenyan shilling.
She urged the government to align its expenditures with its available resources, calling for prudent fiscal management in these challenging financial times.
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