State agencies miss development spending targets by Sh50 billion
The low spending is mainly due to delays in the disbursement of funds by the Treasury, coupled with the effects of budget rationalisation under the Supplementary 1 Budget.
Concerns have been raised over the government's inability to meet its development spending targets after ministries and state agencies failed to use Sh50 billion in the first quarter of the Financial Year 2024-2025
Between July and September 2024, Ministries, Departments, and Agencies (MDAs) spent Sh106.4 billion on development projects, far short of the target of Sh156.4 billion set for the quarter.
More To Read
- Sh48.5 billion lying idle in county funds CBK account despite cash crunch in devolved governments
- Health ministry flagged for low development budget absorption despite high funding
- Staff pay in Gachagua’s office nearly tripled before his impeachment as Deputy President – CoB report
- Pensioners miss out on Sh34 billion payments due to Treasury delays, system downtime
According to a report by the Controller of Budget (COB), Margaret Nyakang'o, the low spending is mainly due to delays in the disbursement of funds by the Treasury, coupled with the effects of budget rationalisation under the Supplementary 1 Budget.
The delays have resulted in slow progress on key projects and risks to timely project completion.
"The low level of absorption of the development budget has been attributed to delays in the disbursement of funds and delays occasioned by budget rationalisation under the Supplementary 1 Budget. Failure to release development funds in a timely manner may cause delays in project completion," Nyakang'o noted in her report on the government's budget implementation for the first quarter of 2024-2025.
The development budget for this fiscal year has been slashed from Sh807.6 billion in the previous year to Sh641 billion.
Despite this reduction, the MDAs have continued to face challenges in accessing the necessary funds to implement their projects.
The COB report indicates that MDAs spent Sh106.4 billion in development, which accounts for only 17 per cent of the annual development budget of Sh641 billion.
The target for the first quarter was an absorption rate of 25 per cent, or Sh156.4 billion. This means that MDAs missed spending Sh50 billion in the three months leading up to September.
The report also highlighted that while the MDAs spent Sh68.5 billion from the exchequer, Sh38 billion of the development projects were financed from other sources.
The slow release of funds has not only affected project timelines but has also contributed to a larger gap in public sector spending.
By the end of November 2024, the exchequer had released Sh105.6 billion for development activities, but the backlog in spending continues to be a concern.
The COB has recommended that the National Treasury ensure timely disbursements of funds based on the cash flow projections of MDAs.
"The COB recommends that the National Treasury should release development funds per MDAs' cash flow projections. In addition, MDAs should enhance their project planning and execution frameworks to improve budget absorption rates," Nyakang'o said.
Beyond development expenditure, the government also spent Sh358.5 billion on recurrent activities during the quarter, and Sh358.6 billion on servicing the national debt.
These recurrent costs have placed additional strain on the country's fiscal space, limiting resources available for critical development projects.
As the financial year progresses, concerns remain about whether the government can meet its development targets, especially with the ongoing delays in fund disbursements.
