Ministries and State agencies failed to spend more than Sh200 billion in the financial year that ended June, shining a spotlight on the government’s ability to deliver on its promises.
A new Treasury report submitted to Parliament attributes the returns to low capacity by various ministries and agencies to implement government projects.
Spending on development projects financed by foreign donors was also below target, the Treasury said.
The failure to spend Sh218.5 billion in the fiscal year put total government expenditure at Sh2.11 trillion, against a target of Sh2.33 trillion.
The shortfall was recorded both in recurrent and development spending.
“The total expenditure and net lending for the period amounted to Sh2,111.5 billion against a target of Sh2,330 billion. The shortfall of Sh218.5 billion can be attributed to lower absorption recorded in both recurrent and development expenditure
by the national government,” said the Treasury.
Critics have raised concerns about the Treasury consistently overshooting budget estimates, which has the effect of raising the cost of credit to both government and the private sector.
The recurrent spending stood at Sh1.282 trillion, excluding Sh37.5 billion spent by the Judiciary and Parliament, compared to a target of Sh1.410 trillion.
John Mutua, a budget expert with the Institute of Economic Affairs, said a major reason for the lower-than-projected budget absorption by ministries and agencies can be traced to failure to prepare work and procurement plans in good time.
“There are challenges with work plans, procurement plans being prepared in time. You will find that the focus on the budget is high during preparation and presentation; people pay a lot of attention when allocations are being made. But after that, the focus tends to wane at the implementation and audit stages,” Mr Mutua said.
The Treasury prepares reports on the implementation of the budget four times a year, but little attention is paid to them even by MPs who have the oversight mandate over the national budget.
Mr Mutua said it was not normal for the low absorption to happen with regard to salaries and wages or even with the pensions of State workers.
“The low absorption for salaries, wages and pensions can only happen if these were put in the budget for workers who were to be recruited. But then the positions were advertised and the targeted number was not recruited as planned. That could very well have happened,” said Mr Mutua.
The government has also taken to retaining workers who should have retired, according to a report released in May this year.
This could have contributed to the lower amount of pensions paid during the year.
“The challenge of an ageing workforce has partly been addressed through retention in service beyond the mandatory retirement age to provide more time to mentor successors,” states the report released by the then Public Service and Gender Cabinet Secretary, Sicily Kariuki (now at Health).
In the case of donor projects, Mr Mutua said the failure to spend was most likely due to delayed disbursements.
“Donors do not normally release money until they have seen a report on the spending of the previous disbursement. This report is sometimes delayed. Obviously you will realise lower absorption with this kind of arrangement,” said Mr Mutua.