Controller of Budget Margaret Nyakang’o. PHOTO | JEFF ANGOTE | NMG
The Controller of Budget (CoB) plans to escalate the fight with the Central Bank of Kenya for real-time access to county accounts to the new Senate after it is sworn in, highlighting the deteriorating relations between the two key institutions at the centre of public finance management.
CoB Margaret Nyakango told the Business Daily Tuesday that the CBK turned down her requests to access accounts of the 47 counties on a real-time basis, a move that has significantly hampered efforts to track payment of pending bills and other expenditures.
Currently, the CoB does not have real-time access to the accounts, a loophole that counties continue to use in making discriminatory payments to contractors besides lodging fictitious claims.
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Additionally, the counties have been accused of taking advantage of this loophole to strike private arrangements with banks for loans that have accumulated interest and added to their financial woes.
“Central Bank has refused. They have told us that they will never give us access. They told us that we need to get a court order for them to grant us access,” Ms Nyakango said.
“If the Senate says yes (approve proposed regulations) it will be law and they [CBK] will have to grant us the real-time access.”
The denial by the CBK prompted the CoB to seek help from the Parliament and draft regulations that if approved by the new Senate, will compel the banking regulator to grant access to the bank accounts.
Lawyer Kipng’etich Koech reckons that the CBK breached the law given the constitutional duty of the CoB in overseeing the use of public funds.
“CBK is being unnecessarily mechanical given the constitutional role of the CoB. If she [CoB] approves payments then why not allow her to have access to the accounts and we know the high levels of financial haemorrhage of public funds at the counties?” posed Mr Koech.
“It is not superfluous for the CoB to request access to the bank accounts, it is within the spirit of the Constitution.”
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CoB, the public office mandated with overseeing the expenditure of public funds, only monitors the use of funds by the national and county governments through quarterly reports.
Counties and the national government are under the law required to submit reports on their expenditure to the CoB every three months.
Expenditure at both levels of government must be approved by the CoB highlighting the critical role of the office in the management of public funds.
But the counties have manipulated these loopholes to make some payments that the CoB says are discriminatory or fictitious.
Pending bills by the counties stood at Sh139.54 billion as at March as businesses and contractors who are yet to get paid close shop while others continue to struggle. Some of the unpaid bills stretch back to the start of devolution in 2013.
“We are approving requisitions from the counties but then there is mischief at the payment. We cannot tell who has been paid until someone comes back and complains but when we check the requisition that contractor was number one, yet he or she has not been paid,” added Ms Nyakango.
The CoB published the Controller of Budget Regulations, 2021 that if approved by the newly elected Senators will for the first time allow monitoring of cash outflows from the accounts of counties.
The Senate of the 12th Parliament rejected the regulations, but the CoB says they will resubmit them once the new house is sworn in.
The regulations if approved will improve CoB’s tracking of cash outflows from the Consolidated Fund, Equalisation Fund, County Revenue Fund and other public funds to ensure the set ceilings are not breached.
The Consolidated Fund holds money from the national government and is used to pay salaries and service debt.
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Money from the Equalisation Fund is used to provide basic services like water and health while the county revenue funds hold cash that the devolved units raise through taxes and levies.
The CoB has also flagged some of the counties for lodging fictitious claims in the requisitions where rogue staff collude with businesses to rip off the public at the expense of contractors who have supplied goods or undertaken works.
Nairobi and Mombasa have been cited as the most notorious in the issuance of fictitious claims, highlighting the impact of corruption that continues to derail services at the devolved units.
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