Treasury on the spot over unexplained Ksh.161B external debt repayment

The National Treasury was on Wednesday put to task over anomalies of Ksh.161 billion external debt repayment for the past three financial years.

Auditor General Nancy Gathungu, in the special audit report on the debt servicing of external loans in Kenya, for the past three financial years, raised pertinent questions, on expenditure amounting to Ksh.161 billion in unclear debt repayment.

Gathungu disclosed to the National Assembly’s Public Debt and Privatization Committee of the National Treasury’s variance in budgeted, approved and actual debt services for the financial years 2020-2021, 2021-2022 and 2022-2023, saying the variances went above the 5% allowed by the law hitting 10% of the amounts approved.

In the financial year 2020-2021 and 2021-2022, the repayments were less than the Controller of Budget approved amounts by Ksh.1.4 billion and a staggering Ksh.83.3 billion respectively, as the Treasury underpaid on the amount allocated by the Controller of Budget.

However, in the preceding financial year, the National Treasury went over and beyond the approved amount by a whooping Ksh.77 billion.

Baringo North MP Joseph Makilap said: “This could be an issue for corruption…PFM Act says you don’t procure services and goods beyond your budget. If you do it, it is an offense.”

Gideon Mokaya, Director of Public Audit at the Office of the Auditor General, noted: “Our position is that these variances are high, and if they are doing the budgeting process, they are captured accurately so that the variances are not as big as we see here.”

Treasury said the fluctuations were caused by the exchange rates of the Kenyan shilling against other currencies.

Even so, the Auditor General said she could not get all the required documents to point the borrowed monies to specific projects.

The audit revealed that out of the 32 sampled project loans, only 18 projects had undergone feasibility studies to ascertain need.

At the same time, the audit established that 22 out of the 32 sampled project loans did not have documentation or evidence to support public participation, leading to projects which did not have the public's input.

A majority of the project loans also did not have approvals exposing the projects to the risk of double-financing and incurrence of costs outside the budget.

The audit also revealed that only 5 out of the 32 project loans had legal opinions from the Attorney General.