Treasury accused of breaking law in Sh975 billion loan deal

A lobby has told the National Assembly that the Treasury’s failure to submit full budget details allowed the government to borrow Sh974.9 billion outside parliamentary control.

The Kenya Christian Professional Forum, represented by Fraud Risk Management Consultant Bernard Muchere and Senior Counsel Charles Kanjama, has accused the Treasury of breaching the Constitution by excluding revenue estimates in the 2024/2025 budget submitted to MPs.

“The 2024/25 and the previous budgets contained only the estimates of expenditure, while advertently concealing the estimates of revenue from the public,” the petition reads. The petition says this omission gave the national executive freedom to borrow funds without guidance from the Appropriation Act.

Under Article 220 (1) of the Constitution, national and county budgets must include both revenue and expenditure projections and explain how the government will finance any budget gaps. The law also requires clear separation of development and recurrent spending.

Instead, the petition says, the Treasury presented the revenue estimates more than a month late on June 13, 2024 well after the constitutional deadline of April 30. These estimates included Sh974.9 billion in borrowings that were not approved by MPs.

The Appropriation Act 2024 only allowed the government to borrow Sh277.82 billion for development spending. However, the petition says this limit was ignored as the borrowed funds were used for day-to-day operations, in clear breach of the Public Finance Management Act.

The petition also criticizes a Treasury statement released on April 17, which outlined actual revenue and net exchequer issues as of March 28. According to the figures, the government borrowed Sh1.05 trillion over nine months, despite development spending standing at just Sh170.8 billion.

This means that Sh874.8 billion was spent on recurrent expenses without the backing of Parliament, which amounts to an average of Sh97 billion every month being borrowed outside the law.

The lobby says this pattern of borrowing has raised Kenya’s debt burden unnecessarily and calls on Parliament to investigate the Treasury’s actions.

They argue that by not submitting complete budget documents on time, the Treasury violated the Constitution and removed Parliament’s ability to provide oversight.

The petition seeks action from lawmakers to restore financial discipline and ensure that future borrowing aligns with constitutional and legal requirements.