The Auditor-General is conducting a special audit of the supplementary budget processes in Kenya to streamline the approval of expenditures in the wake of the controversy surrounding the State's takeover of Telkom.
The International Monetary Fund (IMF) reveals the special audit follows the conclusion of the Executive Board’s fifth review of Kenya’s ongoing loans on July 17th.
The audit comes in the wake of an ongoing probe by the National Assembly Finance and Planning Committee into the August 2022 Sh6.14 billion payment to Jamhuri Holdings Ltd, a special purpose vehicle set up by UK-based private equity fund Helios, for the State’s takeover of Telkom Kenya.
Jamhuri Holdings took up a 60 percent stake in Telkom Kenya in 2016 but opted to exit in 2022 following failure to complete the merger between Airtel Kenya and Telkom Kenya and the excision of assets worth Sh10 billion from Telkom Kenya’s balance sheet.
The Treasury regularised the Sh6.14 billion payment later through a supplementary budget, a matter that has been the subject of the parliamentary inquiry and triggered a debate on the need to tighten Kenya’s supplementary appropriation rules.
“The Auditor General is conducting a special audit on the mechanism, efficiency, and effectiveness of supplementary budgets —including under Article 223 of the Constitution — which is expected to be published by end-September 2023.
The authorities are also working to enhance Public Investment Management practices by developing a Public Investment Management Information System to automate the investment project cycle and strengthen expenditure controls by developing a budget costing methodology to facilitate expenditure prioritisation and estimation of fiscal space,” the IMF says in its report.
According to the IMF, the findings of this special audit are to be tabled by September 30, 2023, just before the Treasury submits the first Supplementary Budget for 2023/24 in October to the National Assembly.
Budget tabling
The supplementary budget due for tabling is expected to focus significantly on efforts towards the settlement of Kenya’s Sh537.4 billion pending bills headache with the National Treasury expected to submit a plan for the same by September 30 as part of the agreement with the IMF.
The government planned to settle pending bills through securitisation, a move which would have necessitated the floating of a bond to retire the arrears.
“Commitment to submit to Parliament by end-October 2023 a Supplementary FY2023/24 Budget to ensure that clearance of any potential carryovers from FY2022/23 does not undermine the achievement of our fiscal targets for this and next fiscal years. The impact of the clearance of any unpaid bills from FY2022/23 will be offset by a Supplementary FY2023/24 budget, which is expected to be submitted to Parliament by end-October 2023,” the IMF indicates about the National Treasury’s commitment.
Article 223 of the Constitution on Supplementary Appropriation empowers the national government to spend any amount not exceeding 10 percent of the sum approved by Parliament under supplementary budgets unless in the case of special circumstances Parliament approved expenditure higher than 10 percent.
