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Treasury: No more lump-sum budget cash for State agencies

By , People Daily Digital
Monday, November 25th, 2019 00:00 | 2 mins read
The National Treasury building. Photo/PD/Alice Mburu

The Treasury will no longer give lump-sum budgets to State corporations, a move aimed at reducing the budget deficit and containing wastage of public funds.

Treasury will now require State corporations to give an itemised financial plan on a need-basis before releasing funds.

In a raft of recommendations to Parliament, Treasury said Semi-Autonomous Government Agencies (SAGAs) or parastatals as they are commonly known, will no longer be receiving one-line item budget as it has been the norm.

The National Assembly Budget Committee, which is tasked with the allocation of money to all government entities, has since approved the recommendations. The committee, which is currently scrutinising the Supplementary Budget, observes that there is a lot of wastage in the corporations, which must be contained.

Treasury Chief Administration Secretary Nelson Gaichuhie has said the State corporations would be expected to draw their itemised budgets from their parent ministries.

“The move is aimed at reducing wastage and at the same time cut the budget deficit,” Gaichuhie told People Daily.

The Budget Committee has also recommended that some of the corporations be merged. The country has 167 parastatals.

Kitui Central MP Makali Mulu, who is a member of the committee, in an exclusive interview told People Daily that currently, nobody cares that budget is not itemised leaving the corporations to do things which are not of importance.

Stop transfers

He said the itemised budgets would be submitted to parent ministries so that they can discuss item by item what they want to do with the money requested.

“We can reduce the budget deficit by a good percentage in areas which are not of priority while others can be left out,” Mulu explained.  

“Instead of a lump-sum budget, parastatals will be giving their prioritised areas which will then be scrutinised in details by ministries. By doing so they can make some savings,” he added.

The Office of the Auditor-General has in its annual reports revealed how officials entrusted with managing State corporations deliberately pay out cash for ghost projects, inflated contract prices and blatantly violated various procurement laws in the course of their duties.

The managers of SAGAS, also failed to account for the billions of shillings received from the National Treasury to fund projects and services such as air transport services, quality healthcare, water, infrastructure and nuclear energy.

For instance, Kenya Airports Authority lost hundreds of millions for awarding tenders worth billions of shillings and later terminating them hence a breach of contract dues.

National Hospital Insurance Fund escalated the cost of building its multi-storey car park by 337 per cent. Its management never justified the increased cost from Sh909.7 million to Sh4 billion.

The National Social Security Fund risks losing more than Sh1.5 billion from unremitted members’ contributions, non-collection of rent, irregular land transfers and stalled projects.

At the same time, Kenya Medical Supplies Authority cannot prove ownership of several pieces of land in Mombasa, Eldoret, Kisumu, Nakuru, Kakamega, Nyeri and Garissa, all valued at Sh180 million, as there are no title deeds to show.

And in another unprecedented move, Treasury says it will recall billions of shillings, which was meant to pay pending bills by 15 counties.

The counties have until next week to pay the bill's failure to which Treasury will stop transfers to the counties.

Gaichuhie said the move was in line with the requirements by law that money, which is not spent by the end of a financial year, be returned to the Treasury.“We are following the law to the letter which requires money not used to be returned by the end of the financial year,” he said.