The National Treasury building in Nairobi.
A lobby group now says that failure by the National Treasury to submit the 2024/25 financial year estimates of revenue to the National Assembly alongside those of expenditure as required by the constitution allowed the government to borrow Sh974.9 billion without the requisite approval of MPs.
The borrowed funds were used to finance recurrent expenditures contrary to the Public Finance Management (PFM) Act, which states that loans are supposed to be for development expenditure only.
In a petition to the National Assembly, Fraud Risk Management Consultant Bernard Muchere and Senior Counsel Charles Kanjama under the Kenya Christian Professional Forum (KCPF), say that the failure to abide by the constitution may have unnecessarily escalated the country’s debt stock beyond the current Sh10.9 trillion as of December 2024.
The 20-page petition, which heavily borrows from the National Treasury’s own documents, notes that the failure to legislate the estimates of revenue “created a loophole enabling the national executive to go on a borrowing spree without the control of the Appropriation Act.”
“This borrowing spree is enabled through overriding controls envisaged in the constitution due to the non-inclusion of the estimates of revenue in the Appropriation Act,” the KCPF, on behalf of the Governance Accountability Movement (GAM) reads.
Senior Counsel Charles Kanjama and fraud Risk Management Consultant Bernard Muchere.
The petition goes on to state that “our concern is informed by the fact that contrary to the constitution, the 2024/25 and the previous budgets contained only the estimates of expenditure, while advertently concealing the estimates of revenue from the public.”
This, the petition warns, has resulted in unsustainable outstanding public debt, “thus, putting a heavy burden on Kenyan taxpayers.”
Article 220 (1) of the constitution states that the budgets of the national and county governments shall contain estimates of revenue and expenditure, differentiating between recurrent and development expenditure.
Public liability
The budgets shall also contain proposals for financing any anticipated deficit for the period to which they apply and proposals regarding borrowing and other forms of public liability that will increase public debt during the following financial year.
John Mbadi the Cabinet Secretary for National Treasury and Economic Planning.
Article 221 (1) of the constitution stipulates that at least two months before the end of each financial year, the National Treasury Cabinet Secretary shall submit to the National Assembly estimates of the revenue and expenditure of the national government for the next financial year to be tabled in the House.
However, the petition notes that the estimates of revenue published in the National Treasury portal, which were tabled in the National Assembly on June 13, 2024 and not by April 30, 2024 as the constitution dictates, “contained unlawful borrowings of Sh974.9 billion.”
This is notwithstanding that the National Assembly approved the Appropriation Act 2024 that capped the national government borrowings of Sh277.82 billion in the development expenditure estimates to finance the budgeted development projects.
“This borrowings were therefore not authorised by the Appropriation Act 2024 nor linked to budgeted development projects,” the petition states.
According to the petition, a review of the Consolidated Fund Services (CFS) in the 2024/25 recurrent expenditure estimates, from where public debts are paid, Sh1.9 trillion was budgeted for the repayment of public debt.
This comprised Sh1.01 trillion in interest payment and Sh843.3 billion repayments of the principal.
Tax revenue
The petition reveals that a further review of the statement of actual revenue and net exchequer issues for three financial years established that the average actual tax revenue raised was approximately Sh2.2 trillion.
This, the petition explains, means that repayment of the public debt of Sh1.9 trillion consumed 86 percent of the tax revenue, leaving Sh300 billion to cater for operation expenses and capital expenditure that were budgeted at Sh2.5 trillion, resulting in a deficit of Sh2.2 trillion.
The petition has also raised questions on the statement of actual revenue and net exchequer issues as of March 28, 2025 issued by the CS National Treasury on April 17, 2025.
The statement shows that while borrowings are supposed to be for development expenditure only, the CS National Treasury, for nine months, borrowed Sh1.05 trillion against the development expenditure of Sh170.8 billion as approved by MPs.
This led to the government incurring odious debts of Sh874.8 billion for nine months translating to Sh97 billion a month, Sh3.2 billion a day and Sh135 million an hour.
The Public Finance Management (PFM) Act gives the National Treasury powers to manage the national government’s public finances in accordance with the constitution, and the principles of fiscal responsibility.
Section 15 (2) (c) of the PFM Act specifically states that in doing so, the National Treasury shall ensure that over the medium term, the national government’s borrowings are used only for the purpose of financing development expenditure and not for recurrent expenditure.
