The
National Government Budget Implementation Review Report for the First Nine
Months of FY2025-26 by the Controller of Budget finds that “increased reliance
on supplementary expenditure under Article 223 of the Constitution” is one of
the key challenges affecting budget implementation, alongside delays in
procurement and the accumulation of pending bills.
The report
reveals that 77 per cent of the recurrent Exchequer issues, equivalent to
Sh144.40 billion, was directed towards public debt for the settlement of
international sovereign bonds.
This
prompts fresh questions by the Controller of Budget over the growing reliance
on Article 223 of the Constitution.
Of the
approved amount, the Controller of Budget authorised withdrawals totalling
Sh206.81 billion, with recurrent expenditure accounting for Sh185.34 billion.
While the
Constitution permits additional expenditure where approved allocations are
insufficient or unforeseen needs arise, the Controller warns that the
increasing use of Article 223 raises broader questions about adherence to its
intended purpose.
Article 223
permits the national government to spend unappropriated money where an existing
budget is insufficient, unforeseen needs arise or money is withdrawn from the
Contingencies Fund.
The report
shows the National Treasury approved Sh276.76 billion in additional expenditure
under Article 223 between July 2025 and March 2026, comprising
Sh207.99 billion for recurrent expenditure and Sh68.77 billion for development
spending.
The
approvals represented six per cent of the national budget and remained within
the constitutional ceiling of 10 per cent.
However,
the amount approved under the emergency provision was more than five times the
Sh48.88 billion approved during the same period in the previous financial year.
It is,
however, the nature of the spending that has raised concern at the Office of
the Controller of Budget.
“The
Controller of Budget observed that some of the approvals under Article 223 of
the Constitution were routine in nature, intended to support day-to-day office
operations,” the report says.
It adds
that the office sought explanations from accounting officers on whether the
expenditure complied with the Public Finance Management (National Government)
Regulations, including whether the spending was foreseeable and whether it
ought to have been provided for during the preparation of the 2025-26 Budget
Estimates.
The
findings show that some ministries resorted to emergency constitutional
provisions to finance expenditure that ordinarily ought to have been included
in the annual budget approved by Parliament.
The report
also provides examples of how the emergency allocations were used.
State House
received an additional Sh4.45 billion under Article 223, noting that “the
over-expenditure on Coordination of State House Functions sub-programme was
attributable to additional funding of Sh4.45 billion under Article 223 of the
Constitution in favour of the State House for other operating expenses.”
Similarly,
the report says the Deputy President Services programme recorded
overexpenditure... attributable to additional funding of Sh507.84 million under
Article 223 to cater for hospitality supplies and services, hire of transport
and other operating expenses.
The report
also found that the National Intelligence Service exceeded its approved budget
after receiving emergency funding, spending Sh53.93 billion on recurrent
activities.
Security
agencies were also among the major beneficiaries. The report says the State
Department for Internal Security and National Administration exceeded its
recurrent budget after receiving Sh8.09 billion under Article 223, while “the
National Government Coordination Services sub-programme surpassed its budget by
32 per cent... utilised for security-related operations”.
The
Controller’s findings come against the backdrop of mounting debt-servicing
pressures facing the government.
According
to the report, the public debt stood at Sh12.82 trillion by March 2026,
representing 69.9 per cent of GDP, well above Parliament’s approved debt anchor
of 55 per cent.
During the
first nine months of the financial year, debt servicing alone consumed Sh1.35
trillion, with the increase largely attributed to principal repayments on
external debt.
The report
further notes that the government has increasingly relied on liability
management operations, including the buyback of international sovereign bonds
financed through the issuance of new Eurobonds, as part of efforts to reduce
refinancing risks and smooth debt maturities.
Even so,
the emergency spending was not confined to debt and government operations.
The report
shows Article 223 funding was also used to facilitate the 2025 national
examinations, the Joint Mobile Registration Outreach Programme for national
identity cards and birth certificates.
Other
initiatives are the Health Internship Programme, the Kenya Covid-19 Health
Emergency Response Project, drought intervention, milk mop-up to stabilise raw
milk prices, the Nyota youth empowerment programme and the Dongo Kundu Special
Economic Zone Project.
The State
Department for Special Programmes received Sh5.61 billion under Article 223
“for purchase of essential food items for drought intervention in the country”,
while the State Department for Co-operatives received Sh2 billion for “milk
mop-up of excess milk” to stabilise raw milk prices.
Although
the Controller does not say the government breached the Constitution, she warns
that there is “over-reliance on Article 223 of the Constitution to fund
government programmes and settlement of debt obligations”, identifying it as
one of the key fiscal challenges affecting budget implementation.
To restore
the constitutional intent of the provision, Nyakang’o recommends that
“requisitions under Article 223 of the Constitution should be applied strictly
in line with the requirements on use of Article 223, which are unforeseen and
of an emergent nature.”
The report
further calls for a review of the legislative framework governing Article 223
and stronger control mechanisms to safeguard fiscal integrity and enhance
budget transparency.
