Why Kenya has run out of cash

The government has used almost half of the revenue collected in the last three months to service the public debt, Parliament’s Budget Office has announced.

According to a report presented to MPs yesterday, the total revenue collected by the government by September 30 was Sh269.7 billion against a target of Sh421.3 billion.

The Star exclusively reported yesterday that the government was undergoing a cash crisis, with the Treasury delaying salary disbursements and other expenditure.

The report, presented to the Mutava Musyimi-led Budget Committee, shows that Sh132.5 billion of the Sh269.7 billion collected between July and September serviced the public debt.

According to the 2015/1016 Budget estimates, the government expects to spend Sh397 billion in settling the national debt.

“The mandatory expenditures are the first charge on the Exchequer receipts and hence the higher the public debt, the less the flexibility in sharing of available resources,” the National Assembly Budget Committee was told.

The report says that the total Exchequer issue was Sh313.3 billion, with 45 per cent going to the Consolidated Fund Services that are used to, among other things, pay debts.

The report shows that 37 per cent of the allocation was to finance ministerial recurrent estimates, 7.7 per cent went to development and 9.9 to the counties.

The report paints a grim picture of the government’s prospects to collect Sh1.68 trillion in the 2015/2016 financial year to finance its Sh1.94 trillion Budget.

While the government is expected to raise revenue of about Sh140 billion monthly, the figures in the report show that only Sh88 billion was collected in the month of September.

In July and August, the government made revenues of Sh181 billion, with Sh152.7 billion coming from taxes.

“This performance in tax revenues is still below the expected average for the period, raising doubts as to whether the government will be able to meet its tax revenue targets for the year,” the report says.

On interrogating the report, the National Assembly Budget Committee summoned Treasury Principal Secretary Kamau Thugge to appear before it on Tuesday.

“The 2015/2016 Budget is being implemented when there are a lot of pressures from demand for repayment of the public debt, catering for pending bills and high exchange rates, among other demands,” the Budget Office report says.

The report shows that the government continues to rely heavily on domestic borrowing to fund its activities, borrowing Sh23.1 billion in July and August.