• The proposed Controller of Budget Regulations, 2021, provide a defined procedure for raising additional cash to meet budget needs.
• MPs raised concerns that the supplementary process is proving disruptive to the policy direction of the budget.
Image: FILE
The Controller of Budget has set tough rules to deal with concerns of flagrant abuse of supplementary budgets by ministries, state departments and agencies.
State agencies will now be subject to strict rules whenever they seek to adjust their budgets beyond the amounts approved by the National Assembly during the budget-making process.
The proposed Controller of Budget Regulations, 2021, provide a defined procedure for raising additional cash to meet budget needs.
The development would be a shift from the current situation where MDAs spend money then ask MPs for approval thereafter, giving no room for control.
For instance, MPs on Tuesday afternoon approved a Sh45.5 billion extra budget sought by the National Treasury citing additional requests from ministries.
The second supplementary estimates for the financial year ending June 2020 would see the budget for the year ending today rise by over Sh120 billion.
In March, lawmakers gave the national government the leeway to spend an extra Sh80 billion but raised concerns of abuse of Article 223 of the Constitution which provides for such spending.
Going forward, the National Treasury will have to submit the requests to the Controller of Budget for approval or justification before presenting the estimates to MPs.
County Executives for Finance will equally be required to submit the requests for borrowing under Article 135 of the Public Finance Management Act, 2012.
MDAs have been pushing for additional cash citing insufficient allocation as well as emerging needs for which no budget has been allocated.
They would be required to present to Treasury reasons indicating that the amount appropriated is insufficient or a need has arisen for expenditure that has not been budgeted.
MDAs will also have to state the proposed source of funding for the additional expenditure and approval issued by the line Cabinet Secretary justifying the expenditure.
Also to be presented would be the national exchequer account balances and reconciled exchequer ledgers.
Once submitted, the budget boss will consider whether the reason for the request was unforeseen and unavoidable in circumstances where no budget provision was made.
Also to be checked is whether the need was unavoidable, could not be accommodated within allocations and tariff adjustments and price increases.
The proposed rules say that the COB would also check the historical trend of utilisation of funds under supplementary appropriation under Article 223 by the respective national government entity.
COB will also check to ensure that the national government may not spend more than 10 per cent of the sum appropriated by Parliament for that financial year.
“This would be unless, in special circumstances, Parliament has approved a higher percentage; and (e) any other factors as may be relevant in the circumstance,” the rules read in part.
The new rules give the Controller of Budget powers to decline to approve a requisition when not satisfied that the request for approval for withdrawal of funds complies with the law.
“Where the Controller of Budget declines to approve the request of withdrawal of funds, the National Treasury may resubmit the request upon addressing the issues raised by the Controller of Budget.”
Where the Controller of Budget is satisfied, he or she shall approve the request for withdrawal of funds and submit the approval to the Central Bank of Kenya and a copy to the National Treasury.
County treasuries will also follow the same process as it applies to the respective county government making such requests.
A county treasury shall submit to the Controller of Budget the request from the county government entity and the proposed source of funding for the additional expenditure.
They will also be required to provide an approval issued by the county executive for expenditure together with the justification for approval.
Also to be declared are the county exchequer account balances and reconciled exchequer ledgers as at the time of the request.
The Budget Committee of the National Assembly has over time cited non-compliance with Article 223, amid concerns the National Treasury had taken over the budget-making role from MPs.
New items introduced in the budget through the supplementary estimates have also been a point of concern for the Kieni MP Kanini Kega-led committee.
“The committee is concerned that the supplementary process is proving disruptive to the policy direction of the budget due to the high frequency, level of adjustment, and lack of consultation,” BAC said in its report on the second estimates.
-Edited by SKanyara