The value of funding requests by counties, and government ministries and departments (MDAs) that have been snubbed by the Treasury has risen substantially, an analysis by the Auditor-General has revealed, pointing to disruption to key programmes.
Auditor-General Nancy Gathungu said the situation has resulted in underfunding of public programmes.
“Over the years, our audits indicate that ministries, departments, and agencies and county governments continue to be underfunded as Exchequer requests are not honoured as requested,” she said in a report to the National Assembly Select Committee on Budget and Appropriations on the annual estimates of revenue and expenditures for the fiscal year 2025-26.
“In particular, the development budget has been underfunded over the years, which has been attributed to delayed disbursement of donor funds and delayed counterpart funding from the government.”
Analysis by Ms Gathungu’s office showed that underfunding of counties and MDAs hit a five-year high in the 2023/24 fiscal year, with some Sh467.8billion out of the approved expenditure Sh4. 26 trillion not disbursed by the Treasury, an equivalent of 11 percent.
In the 2022-23 fiscal year, the Treasury failed to disburse Sh377.4 billion of the Sh3.62 trillion approved expenditure for counties and MDAs, which was equivalent to 10 percent, marking an increase from the previous year when some Sh256.4 billion out of the approved Sh3.33trillion wasn’t released, or seven percent.
The analysis further shows that in the financial year 2020-21, the Treasury did not release Sh151.6 billion out of the Sh2.95 trillion approved for release to the entities, or five percent. In the previous year, some Sh204 billion out of the approved expenditure of Sh2.95 trillion was not released.
“In addition, exchequer issues are released late to MDAs and county governments even as late as July after the year-end for the last three years,” said Ms Gathungu in reference to the 2021-22,2022-23, and 2023-24 financial years.
“As a result of late Exchequer releases, both the National Government and County Governments entities are left with limited time to absorb the funds. There is also a risk of inefficient utilisation of resources by entities, leading to wastage of public resources,” she added.
The Auditor General said the late disbursements disrupt the performance of government programmes by slowing down the attainment of development objectives and service delivery to the citizens.
Ms Gathungu said that the low allocation and under-expenditure of the development budget indicate that some development programmes are not implemented as planned, and some services are not delivered.
“This is likely to affect the rate of development in the Country as envisaged in the National Development Plan, Vision 2030, and achievement of critical African Union Agenda 2063 and Sustainable Development Goals (SDGs) targets. In addition, the projects are funded through external borrowing, adding to public debt, which includes financing costs, penalties, and commitment fees that further lead to higher costs for the taxpayers,” the Auditor General said.
