The National Treasury is in the spotlight following revelations that the government paid Sh6.6 billion in four years as commitment fees on undrawn loans procured from foreign lenders.
Auditor-General Nancy Gathungu made the revelation before the Budget and Appropriations Committee (BAC) of the National Assembly, with MPs questioning Treasury’s commitment to prudent management of the “limited” public funds.
The government paid the penalties between the 2020/2021 and 2023/2024 financial years, at a time the country continues to experience shortfalls in funds to finance critical expenditures like school capitation.
It emerged that of the Sh515.1 billion that was borrowed to finance 14 projects, Sh304.4 billion had not been spent. According to Ms Gathungu, some of the projects were about to lapse before completion.
“Some of the projects have clauses where they attract commitment fees for any undrawn amounts leading to wastage of funds and lack of value for money,” Ms Gathungu told BAC, chaired by MP Samuel Atandi.
Kitui Central MP Makali Mulu led the committee members in pointing fingers at Treasury mandarins for deliberately sitting on parliamentary resolutions that “would have enhanced fiscal discipline.”
“None usage of loan amounts among others are issues this committee has deliberated on and recommendations made and adopted by the House. Why the Treasury is not keen to implement the resolutions is a matter that requires our intervention,” said Dr Mulu.
Ms Gathungu challenged the committee, saying, “It is time Parliament took decisive action on future borrowings”.
The projects affected include the Sh1.1 billion East Africa Skills Transformation and Regional Integration project that was financed by the World Bank through the International Development Agency. The project was to run from 2018 to 2024.
However, Ms Gathungu’s documents show that as of June 30, 2024, the project had drawn Sh526.4 million, about 61 per cent of the donor’s commitment.
There is also the Sh23.5 billion Kapchorwa-Suam-Kitale road and Eldoret bypass projects that had an undrawn balance of Sh8.23 billion, which represents 35 per cent of the expected total funding, by September 30, 2023.
The National Urban Transport Improvement project that was to be finalised by June 30, 2024, had an undrawn balance of Sh16.01 billion, about 84 per cent of the funding.
The Multinational Horn of Africa Isiolo-Mandera Corridor, El Wak-Rhamu Road upgrading project had drawn only Sh16.05 billion, representing 0.07 per cent of the total commitment.
The Eastern Africa regional transport, trade and development facilitation project was started in 2015 and was expected to end by December 29, 2024. As of June 30, 2024, Sh45.2 billion had been drawn from the donor commitment of Sh49.3 billion.
