Concerns have emerged over the government’s continued poor spending on development projects after lack of funding saw ministries fail to spend Sh50 billion in the quarter to September 2024.
In the three months, Ministries Departments and Agencies (MDAs) used Sh106.4 billion on implementation of projects against a quarterly target of Sh156.4 billion, drawing concerns from the controller of budget (COB) that most of them did not effect their plans.
The trend has been attributed to delays in the release of funds by the Treasury. “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,” COB Margaret Nyakang’o notes in her report on the national government’s budget implementation in the first quarter of 2024/25.
MDAs during the quarter spent Sh106.4 billion on development, which was 17 per cent of the annual growth budget of Sh641 billion.
The COB report shows that despite slashing development budget from Sh807.6 billion during the previous fiscal year to Sh641 billion in the current fiscal year following shelving of the Finance Bill, 2024, MDAs have continued to face challenges in getting funds to implement projects. “Ministerial development expenditure was Sh106.39 billion, representing an absorption rate of 17 per cent compared to the expected absorption rate of 25 per cent in the first three months of the financial year. Consequently, most MDAs did not meet their quarterly targets,” the COB noted.
Had the MDAs spent 25 per cent of the annual development budget, they would have used Sh156.4 billion, which means they missed spending Sh50 billion during the quarter.
During the period, development spending by the MDAs coming from the exchequer totalled Sh68.5 billion, which meant that Sh38 billion worth of projects were financed through other sources.
By the end of November, the exchequer had released Sh105.6 billion to finance development activities.
“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,” Dr Nyakang’o advises.
Apart from the Sh106.4 billion that was spent on development during the quarter, the government also used Sh358.5 billion on recurrent activities, and Sh358.6 billion on consolidated fund services, mainly servicing the public debt.
