President Uhuru Kenyatta has rejected the creation of a special fund for Parliament, effectively sealing a loophole that would have allowed the National Assembly to ring-fence its annual budget from cuts by the Treasury.
A Bill sponsored by former Leader of Majority Aden Duale had sought to amend the Public Finance Management Act, 2012 to “establish any other fund for the purpose of Parliamentary or a House of Parliament.”
This would have seen Parliament run a scheme similar to the newly created Judiciary Fund meant to finance administrative expenses and other functions. That would mean Parliament would not have surrendered any surplus amount allotted to it in the annual budget by the close of the financial year.
“The administrator of a national public fund shall ensure that earnings of, or accruals to a national public fund are retained in the fund unless the Cabinet Secretary directs otherwise,” the Bill stated.
Mr Kenyatta, however, declined to assent to the Bill, saying the proposed special fund may lead to wastage.
“He (the President) adds that the provision in Bill may have adverse impact on the principle of separation of powers between the Executive and the Legislature with regard to management of public monies,” National Assembly Speaker Justin Muturi said on Thursday in a communication to MPs.
“To fully accommodate his reservations, the President recommends that the Bill be amended to permit the establishment of other parliamentary funds, but limit the purpose of such funds to cater for Parliamentary Mortgage, Parliamentary Car loan and the Parliamentary Catering, which indeed was the intention of the Bill.”
The President in a memorandum to MPs listed the specific schemes which could finance the operations of the National Assembly through the Parliamentary Fund established under Section 24 of the PFM Act, 2012.
The MPs on Thursday evening agreed with the President following recommendation by the Finance Committee, noting that it specified the funds that Parliament could establish.
“The committee having considered the President’s reservations to the Public Finance Management (Amendment) Bill, 2020 and pursuant to Article 115 of the Constitution, recommends that the House fully adopt the President’s recommendation,” Joseph Limo, the committee chairman, said in a report.
Mr Kenyatta only allowed the Parliamentary Service Commission (PSC), the MPs’ employer, to open and operate a new scheme known as the Parliamentary Catering Fund in addition to existing four schemes.
The fund was mooted by the Members Services and Facilities Committee which runs Parliament cafeteria following benchmarking visit abroad on how to run five-star catering facilities
The Bill was a fresh attempt to circumvent a court ruling that annulled amendments to section 24(2A) of the PFM Act, 2012 which anchored the Public Finance Management (Parliamentary Catering Fund) Regulations 2019.
With the creation of the Catering Fund, taxpayers will foot part of the cost of the lawmakers’ catering services since the fund would consist of money to be “appropriated by Parliament.”
Currently, the PSC runs the catering service that offers MPs a five-course lunch at Sh600. A similar meal at most five-star hotels in Nairobi costs between Sh2,700 and Sh3,500, inclusive of tax.
The Treasury allocated Parliament Sh37 billion in the current financial year to facilitate its oversight role. The 418- member Parliament includes both Speakers of the Senate and the National Assembly.
The country is currently facing an economic crunch, mainly due to the Covid-19 pandemic which has subdued demand for goods and services, leading to low revenue collection.
Data by the Treasury shows the Kenya Revenue Authority (KRA) tax collections in April dropped by Sh20.31 billion, reflecting the subdued business environment. Tax collections fell to Sh120.1 billion in April from Sh140.41 billion in same month last year, representing a 14.46 percent drop.
This drop in revenue collection mirrored a struggle by businesses to stay afloat. Many firms have been forced to cut back on operations or shut down altogether, leaving thousands of Kenyans without jobs.
The country’s economic growth slowed down to 4.9 percent in the first quarter of this year from 5.5 percent last year, the slowest pace in eight years despite an overall rise in exports.