Pressure is piling on the Treasury to set new rules for donor-funded projects as a stash of foreign cash remains unutilised over the years.
The National Assembly’s Public Accounts Committee (PAC) has given acting Treasury Secretary Ukur Yatani three months to develop a framework to address challenges associated with low absorption of donor funds, including procurement issues.
“Further, donor-financed programmes and projects should only be included in the budget if the Ministries, Departments and Agencies (MDAs) have the requisite capacity to meet the donor conditions,” Ugunja MP Opiyo Wandayi-chaired PAC said in a report the Parliament adopted before MPs went on Christmas recess.
The committee made the recommendation following former Auditor-General Edward Ouko’s revelation that the government recorded an expenditure of Sh980.2 million against a budget of Sh2.03 billion under the Global Fund for scaling up Malaria control interventions for impact project (Grant No. KEN-M-TNT).
“The under absorption was attributed to various reasons including procurement-related challenges,” PAC said.
Mr Ouko said the Global Fund KEN-M-TNT had a budget of Sh2.03 billion for the year to June 2017 but recorded an expenditure of Sh980.2 million leaving a balance of Sh1.05 billion equivalent to 52 percent budget under-absorption.
“This implies that more than half of the activities budgeted for development programmes were not implemented.
“Similarly, from the statement of receipts and payments, an amount of Sh961.4 million was received during the year against a budget of Sh2.03 billion and thus Sh1.06 billion of budgeted funds were not received,” he said.
Mr Ouko said in the previous financial year, funds amounting to Sh1.6 billion were not received. “It is, however, noted that the programme was closing on December 31, 2017, no explanation has been provided on how the project management intends to account for the undisbursed funds. Consequently, the project may not have fully implemented its activities,” he said.
The Treasury told the committee that the main activities under the Malaria Grant are the procurement of long-lasting insecticide-treated mosquito nets and rapid diagnostic test kits.
Most of the deliveries for the mosquito nets were expected in May 2017 following which payment was to be done.