Treasury borrowed excess money for poll kits purchase

The controversy surrounding the cost of securing Biometric Voter Registration (BVR) kits deepened on Monday after it emerged that the Treasury borrowed more than it needed to from the Standard Chartered Bank.

Finance permanent secretary Joseph Kinyua said that although the government signed a Sh7.2 billion facility from the bank, it would only draw Sh6.3 billion.

Mr Kinyua said the Canadian government had guaranteed the government to borrow money equivalent to 65 million euros, about Sh1 billion more than the cost of the kits, which will be used from Tuesday next week to register a targeted 18 million voters.

Also read: First batch of 8,000 voter roll kits arrives

It is not clear why the Treasury signed for the guaranteed amount instead of just what it needed, potentially committing taxpayers to higher debt service obligations.

“We will only pay interest for the amount that we will draw and not the entire amount of Sh7.6 billion that we signed for. You only pay for what you draw, not more,” said Mr Kinyua.

The shilling has weakened since the contract signing hence the variation in actual amount borrowed.

Constitutional Affairs Minister Eugene Wamalwa had said in the wake of the disparity that the extra borrowing was to meet the higher cost of air freight, instead of sea freight.

The Sh6.3 billion was also being questioned because the Government had paid the French supplier Safran Morpho Sh2.4 billion in advance, meaning only the balance of Sh3.9 billion should have been borrowed.

Mr Kinyua said the down payment would be offset by part of the disbursement from Standard Chartered Plc.

The government would then repay the loan in instalments over a period of 10 years at an interest rate of 5.12 per cent.

The PS was speaking on the sidelines of a training seminar on internal audit for government accountants at the Sarova Panafric Hotel in Nairobi.

The seminar is meant to improve the internal auditing standards across government ministries.

Mr Kinyua said there had been a misunderstanding on the payment of salaries of police officers after the Ministry for Internal Security omitted them from its budget proposals.

“The pay to the police was approved three years ago and the Sh3.7 billion was what remained to be paid. We will pay only that,” said Mr Kinyua. Police, however, have been demanding another salary increase altogether.

Mr Kinyua said the 47 counties will get full consideration in the next three-year Budget process called Medium-Term Expenditure Framework (MTEF) in 2013.

He added the Transition Authority would provide guidance on the counties that may not transition into full-fledged operations due to financial hiccups by April next year.
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