Budget controller questions Sh54bn foreign debt payment

Politics and policy

President Uhuru Kenyatta arrives at Waterkloof Air Force Base, Pretoria to attend the 25th Ordinary Session of the African Union in South Africa last weekend. PHOTO | FILE 

By KIARIE NJOROGE, gkiarie@ke.nationmedia.com

In Summary

• Controller of Budget says overdraft facility was used to move out huge amounts of money.

Controller of Budget Agnes Odhiambo has raised the red flag over unauthorised withdrawal of Sh54 billion from the Central Bank of Kenya (CBK) to service unspecified foreign debts.

The money used to make the Goldenberg-type payment was withdrawn directly from the CBK overdraft facility contrary to the legal requirement that servicing of foreign debt be done through exchequer issues that must be signed by the Controller of Budget. 

Ms Odhiambo says in the third quarter budget implementation report that she authorised the payment of Sh39.95 billion to service foreign debt but the total expenditure was Sh94.26 billion — meaning the actual expenditure was higher than what she authorised because of direct payments made from the CBK’s overdraft facility.

“The actual expenditure of Sh94.26 billion exceed exchequer issues by Sh54.31 billion. It is recommended that a special audit be undertaken by the Auditor-General to establish the cause of the difference,” the report says.

Treasury Principal Secretary Kamau Thugge said he was not aware of any payment to service foreign debt from the CBK’s overdraft facility.

He was, however, firm that no money can leave the Consolidated Fund Services (CFS) without the Controller of Budget’s authority.

“Here at the Treasury, we cannot order anybody to make payments from the CBK without following the established procedure,” Dr Thugge said.

Kenya has been racking up external debt to fund infrastructure projects, pushing the foreign debt stock to Sh1.28 trillion by end of March.

Recent debt includes the $2 billion Eurobond and the Sh425 billion concessionary loan that China advanced Kenya for construction of the standard gauge railway.

The Constitution bars any withdrawal of public funds without the approval of the Controller of Budget, who must to be guided by the law.

The Controller of Budget’s office was created as an expenditure monitor to ensure money is spent for budgeted functions and to seal loopholes for fictitious payments that characterised the infamous Goldenberg scheme.

Goldenberg and Anglo-Leasing, the two biggest financial scams in Kenya’s history, have been blamed on weak controls at the Treasury and the Central Bank.

The Controller of Budget’s report for the first nine months of the 2014/15 fiscal year paints a picture of profligacy amidst persistent calls by the Jubilee government’s top leadership for austerity.

The Presidency for example spent Sh1.1 billion on travel and hospitality; a 133 per cent rise over the Sh472 million it spent in a similar period the previous year.

The Presidency’s expenditure on hospitality, conferences and catering nearly tripled from Sh225 million to Sh700 million in the nine-month period ending March 2015.