The government
should not allocate billions of shillings to ministries and counties that
lack the capacity to spend the money, financial professionals have advised.
The experts say
the practice is fuelling wasteful supplementary budgets, slowing development
projects and undermining value for taxpayers.
Speaking during a post
budget public finance discussion by the Institute of Certified Public
Accountants of Kenya, office of the controller of budget argued that public
spending plans should be based not only on available resources but also on the
ability of government agencies to implement projects within the financial year.
“If we know
that you cannot absorb the funds, then let’s not give it to you, ministries
frequently receive large allocations only to spend a fraction of the money
before seeking reallocations through supplementary budgets,” Deputy Director
Research and Planning, in the Office of the Controller of Budget Cyrus Ondari
said.
From the forum it emerged
that weak procurement systems, implementation delays and poor project planning
continue to limit budget absorption, particularly for development expenditure,
leaving billions of shillings idle while critical infrastructure and public
service projects stall.
For Instance, a
review of the latest Controller of Budget report for the nine-month period to
March 2026, shows that five counties did not refund unspent balances from the
2024-25 financial year to their County Revenue Fund (CRF) accounts.
Bomet, Kericho, Laikipia,
Nairobi City and Nandi County failed to return the funds as required under
Section 136 of the Public Finance Management (PFM) Act, 2012.
Instead, the
unspent balances were carried forward and used in the subsequent financial
year.
“We monitor
how resources allocated to national and county governments are utilised to
ensure they translate into effective service delivery,” added Ondari.
The warning comes
as Kenya prepares for another budget cycle amid mounting pressure to balance
growing debt obligations, rising recurrent expenditure and ambitious revenue
targets.
ICPAK chief executive officer Grace Kamau said the country’s spending priorities remain
heavily skewed towards recurrent expenditure, leaving inadequate resources for
investments that drive long-term economic growth.
She noted that of
the approximately Sh4.8 trillion national budget, more than three-quarters is
committed to recurrent expenditure and debt servicing, significantly limiting
the government’s ability to finance productive development programmes.
According to
Kamau, nearly Sh2 trillion is allocated to recurrent expenditure while another
Sh1.5 trillion goes towards debt repayment, leaving a relatively small portion
available for development projects.
“As we get
into the next planning cycle, we must start seeing some trajectory towards
reducing our expenditure on recurrent expenditure and moving towards
development,” she said.
She argued that
increased investment in infrastructure, productive sectors and other
development programmes would generate stronger economic activity, expand the
tax base and ultimately improve government revenues.
Development
spending has increasingly come under pressure as Kenya grapples with rising
public debt servicing costs, forcing a growing share of tax revenues to finance
salaries, operations and debt repayments instead of capital investments.
The experts also
questioned whether the government’s ambitious tax collection targets are
achievable under the current economic environment.
The National
Treasury is targeting about Sh3 trillion in ordinary tax revenue, alongside
additional collections from appropriations-in-aid, to finance government
spending.
However, Kamau
warned that unrealistic revenue assumptions expose the country to wider fiscal
deficits when expenditure commitments proceed despite revenue collections
falling short of projections.
“We are going
to raise Sh3 trillion from taxes, but the question is how realistic is this?
Are we really going to collect the Sh3 trillion?” she posed.
She cautioned that
governments often commit expenditure based on optimistic revenue forecasts,
only to resort to increased borrowing or larger budget deficits when
collections underperform.
The discussion
also raised concerns over the quality of public expenditure, with experts
questioning whether taxpayers are receiving value for money from government
procurement.
Convener
and public finance and tax committee at ICPAK Robert Waruiru, argued
that compliance with procurement procedures alone should not be the benchmark
of accountability if public institutions continue purchasing goods and services
at prices significantly above prevailing market rates.
“There is a
joke that goes around that so long as the procurement process has been
followed, value for money becomes secondary,” said Waruiru.
He challenged
oversight institutions to interrogate government spending more aggressively,
asking why ordinary household items often cost several times more when procured
by public institutions.
“Why is a
tissue paper costing Sh200 when I go to the shop and get it at Sh30 or
Sh50?” he asked.
The panel called
for stronger oversight by Parliament, the Office of the Auditor-General, the
Controller of Budget, professional bodies and citizens to ensure public
resources deliver measurable outcomes.
They further
called for realistic budgeting at both national and county levels, warning that
inflated revenue projections often create funding gaps that contribute to
pending bills and stalled projects.