Written By Lisa Murimi
A report by Auditor General Nancy Gathungu has revealed that the Treasury over budgeted for loan repayments in three financial years.
The Debt Servicing of External Loans in Kenya report detailed overbudgeting between the 2020/2021 and 2022/2023 financial years, during the Jubilee administration.
The government attributed the overbudgeting to anticipated fluctuations in the exchange rate, as most of Kenya’s debt is in foreign currencies, especially American dollars.
The auditor noted that estimates of debt servicing payments were over budgeted by an average of 10%, including 8% in FY 2020/2021, 22% in FY 2021/2022, and 0% in FY 2022/2023, compared to actual CBK debt servicing payments.
In the 2022/2021 financial year, the government budgeted Ksh252.3 billion for external debt servicing but paid only Ksh 233.8 billion, resulting in a Ksh 19.4 billion over budget.
Similarly, in 2021/2022, the budget was Ksh 328.1 billion against an actual payment of Ksh 255.7 billion, with an over budget of Ksh 72 billion.
In 2022/2023, the budget for debt servicing was Ksh 389.4 billion, while Ksh 388 billion was paid, creating a Ksh 642 million over budget.
The report explained that the 5% provisioning for currency fluctuations is based on long-term depreciation of the Kenya Shilling.
However, recent fluctuations have exceeded 5%, necessitating adjustments in provisioning assumptions agreed upon with the International Monetary Fund (IMF).
The Auditor General also revealed discrepancies in payments made versus amounts approved by the Controller of Budget (CoB).
For 2020/2021 and 2021/2022, repayments were less than CoB-approved amounts by Ksh1.4 billion and Ksh83.3 billion, respectively.
Conversely, in 2022/2023, the government paid Ksh 77 billion more than the approved CoB figure.
Treasury Cabinet Secretary Njuguna Ndung’u and his team have yet to respond to the report’s findings.
