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Revelations by the Controller of Budget that the Eurobond proceeds were deposited in an offshore account which she has no control over shocked the country last week. The Controller told the National Assembly’s Public Accounts Committee (PAC) the said Sh53.2 billion was withdrawn from the account and used to pay a loan without her approval. It was also unclear if the balance of Sh73.4 billion was spent or whether it is still in the account. Her report confirmed findings captured in the 2013/14 Auditor General report. The National Treasury Cabinet Secretary also admitted to the PAC committee that low revenues with high demands were leading to the current cash crunch.
This issue brings into sharp focus the role that the National Assembly plays in undertaking its oversight responsibilities. The Assembly through PAC ought to have asked for guarantees from treasury on where the money will be deposited in the first place and the specific projects the bond is meant to be used for.
Pending bills have also soared in government including in counties. The problem with pending bills is that it becomes expenditure in another financial year. Every year Parliament has to approve any expenditure. So when ministries have pending bills the accounting officers are basically making commitments for another year kind of usurping the role of Parliament which is wrong.
But the Euro Bond issue is not isolated. It ties in with the large cash crunch that the government is struggling with. Large infrastructure projects requiring huge capital investments have meant that the government borrows heavily to finance them. This in addition to tax collections not increasing means that the ambitious projects, competing with other core obligations like salary demands leads to a financial quagmire.
In March, the burden of the Eurobond alarmed Parliament following revelations that the country will pay Sh16.4 billion in interest payments on the debt in this financial year. MPs were alarmed because data indicated that interest payments on bond will account for 54 per cent of the total interest payment on foreign debt.
Kenya’s total debt is estimated at about Sh2.8 trillion at the end of June 2015, with foreign debt accounting for nearly half the borrowing. Yet the government still has an appetite to continue borrowing.
Borrowing in itself is not a bad thing. However increasing cases of corruption with less people being brought to book says a lot about wanting to stamp out the vice and promote accountability in the public sector.
While the executive could stall for political reasons to hold state officers to account, the people’s representatives need to show teeth that they stand on the side of accountability. They control the purse strings by determining allocations and also checking the use of the same. If government spending is beyond its means, Parliament has the power to control it and it need to exercise this responsibility.
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