Friday, 7 March, 2025
Finance Committee cautions against abuse of article 223, calls for prudent budgeting by MDAs๐๐ฎ๐ง๐ ๐ ๐๐จ๐ฐ๐๐ซ๐๐ก๐ฎ๐ซ๐ฌ๐๐๐ฒ ๐๐๐ซ๐๐ก ๐, ๐๐๐๐
Members of the Departmental Committee on Finance and National Planning have cautioned government agencies over a growing trend to use the back door to have certain programs not captured in the budget funded under Article 223 of the Constitution.
The Members who were meeting with the officials from the State Department of National Treasury led by the Principal Secretary, Dr. Chris Kiptoo, underscored the need to strictly adhere to the provisions of Article 223 and only apply it in emergency situations.
Article 223 of the Constitution of Kenya allows the national government to spend money that has not been appropriated, allowing the government to seek Parliamentโs approval later.
According to the provisions of the law, appropriations of monies not approved by Parliament can occur when the amount appropriated for a purpose is not enough, or when a new need arises for an expenditure that was not previously appropriated or even when money has been withdrawn from the Contingencies Fund to cater for unforeseen emergencies.
Members of the Committee led by the Chairperson, Hon. Kuria Kimani took PS Kiptoo to task to explain if the National Treasury had complied with the provision that any government agency applying Article 223 to appropriate monies must within two months of the first withdrawal, request approval from Parliament.
โPS, it is imperative that the application of Article 223 to withdraw money from the consolidated fund be in strict compliance with the provisions of this law. Is there evidence that the State Department sought approval from Parliament after the first withdrawal?โ, Hon. Kuria Kimani sought to know.
In response, PS Kiptoo acknowledged that the Cabinet Secretary for National Treasury Hon. John Mbadi had received requests for withdrawal of funds under Article 223 across government departments amounting to Kshs. 88bn which he had approved.
Among this, was the request from the State Department of the National Treasury geared towards funding a resource gap following a short fall in the budgeting of some programs by the Department.
He however noted that only a half of the amount had been disbursed noting that with the ongoing consideration of Supplementary Budget II, further disbursement may not be necessary.
He also informed the Committee that the State Department was seeking the approval of additional expenditures under Article 223 amounting to Kshs. 3,143.55mn, Kshs. 1,100mn being for Recurrent and Kshs. 2,043.55mn for Development votes.
Not satisfied by this explanation, Committee Members emphasized the need for the Department to remain prudent in budgeting, pointing out that it was not good practice to apply Article 223 to cater for Recurrent expenditure which should have been envisaged.
Butula lawmaker Hon. Joseph Oyula called on the National Treasury to serve as an example to other ministries, in ensuring they budget adequately.
โThe National Treasury should serve as an example to other ministries. If the National Treasury underbudgets with the hope to later utilize Article 223, how will you restrict other ministries from such a trend?โ, he posed.
Committee Members Hon. David Mboni (Kitui Rural), Hon. Joseph Makilap (Baringo North) and Hon. (Dr.) John Ariko (Turkana South) insisted that there is need to restrict the application of this law to emergency situations.
Hon. Mboni pointed out that some government agencies had displayed contempt before the Committee when facing scrutiny over their budgets, on the strength that they could go around and apply the Article to pay for programs and projects declined by the Committee.
On his part, Hon. Makilap hinted that lawmakers could in the near future institute a constitutional amendment to curb the abuse of this law, so as to enhance fiscal discipline in budgeting.
During his presentation, PS Kiptoo told the Committee that in the six months to December 2024, revenue shortfalls and emerging expenditure pressures had affected the ability to execute the FY 2024/25 budget in a timely manner.
He cited the Civil protests in June, July and August 2024, the consequent withdrawal of the Finance Bill 2024 and the slow down of the economic activity in the first three quarters of 2024 as some of the challenges that have necessitated the revision of the budget.
At the same time, PS Kiptoo sought to offer a clarification on a matter attributed to submissions made by the Controller of Budget to the Committee, and which was widely reported in the media recently, terming it a misrepresentation of facts.
In the submissions, the Controller of Budget Dr. Margaret Nyakang'o had raised alarm to the Committee, over a number of requests for withdrawal from
the Consolidated Fund emanating from the National Treasury being filed manually, rather than digitally.
The CoB had also indicated that some requests for withdrawal relating to settlements of public debt had been sought in foreign currency.
In his clarification, Dr. Kiptoo noted that the State Department was currently implementing a shift from a manual process which involves a lot of paper work, to the digital system which is more efficient, but noted that they were yet to fully migrate into the digital system.
โHon. Chairperson, disbursements to the Counties, Juduciary Fund and some transactions relating to settlement of domestic debt is yet to fully digitized due to some complexities. Weโre however in the process of ensuring that all transactions are fully digitized by the beginning of the next Financial Yearโ, the PS assured.
While expressing concerns that the media had taken the submissions of the Controller of Budget out of context, he implored on the media to embrace accurate reportage and urged the Committe to always invite the National Treasury alongside other related agencies whenever such a matter arises, so as to ensure all areas of concerns are addressed on the spot.
The Members later engaged the State Department of Economic Planning led by the Principal Secretary, Mr. James Muhati.