Kenya’s Budget and Appropriations Committee has received a detailed assessment from the Auditor General highlighting deepening challenges in the implementation of the 2024/25 national and county budgets. The Committee met Auditor General FCPA Nancy Gathungu to evaluate audit findings covering the ongoing fiscal year and the first quarter of 2025/26, amid growing concerns about stalled development projects, rising pending bills and uneven budget absorption across key public sectors.
The Auditor General told the Committee that the widening gap between projected and actual revenues collected by both the National Treasury and county governments remains the single most persistent pressure point in the execution of approved budgets. She noted that revenue performance fell below expectations in the 2024/25 fiscal year, creating cash flow constraints that directly affected disbursements, procurement decisions and the implementation of priority government programmes.
According to the Auditor General, such shortfalls often set off a chain reaction in service delivery, where Ministries, Departments and Agencies face unpredictable funding flows, suppliers go unpaid for long periods, and counties struggle to meet operational needs. These delays contribute to the accumulation of pending bills, a long-standing fiscal risk that continues to persist despite repeated directives from the National Treasury for entities to clear eligible bills.
At the county level, FCPA Gathungu reported that development budget absorption averaged just 56.5 percent in the last financial year, underscoring the persistence of structural and planning inadequacies. She cited unrealistic budget targets, delayed procurement processes and weak project preparation as major contributors to low utilization. Additionally, counties continue to experience late or partial disbursements from the national government, further slowing the implementation of development plans.
The Auditor General also pointed to systemic issues affecting implementation across government entities. These include delays and shortfalls in exchequer releases, mismatches between budgets and cash plans, reductions introduced through the first Supplementary Estimates, and periodic downtime on the Integrated Financial Management Information System, which has occasionally slowed or halted payment processing.
In her presentation, the Auditor General recommended a stronger national focus on fiscal discipline, realistic revenue forecasting and transparent execution of approved budgets. She urged both levels of government to limit public debt accumulation, noting that excessive borrowing reduces fiscal flexibility and exposes the economy to shocks. Strengthening enforcement mechanisms in the management of public resources, she said, would help curb the recurrent problem of pending bills.
Beyond domestic budget execution, the Auditor General advised the country to enhance foreign exchange reserves and diversify its export base, arguing that a stronger external position would help stabilise overall economic performance. Kenya has in recent years faced fluctuating external balances and currency depreciation pressures driven by global interest rates, elevated import costs and limited export growth.
While highlighting challenges in other sectors, FCPA Gathungu reported that her office demonstrated strong internal fiscal management in 2024/25. The Office of the Auditor General absorbed 98 percent of its allocated budget, utilising 8.084 billion shillings out of an actual 8.174 billion shilling allocation. This contrasts sharply with several government entities that struggle to surpass moderate absorption rates.
For the current fiscal year, the Auditor General said her office had spent 2.5 billion shillings from its 8.689 billion shilling allocation in the first quarter. She attributed the relatively low absorption level to procurement difficulties arising from Kenya’s shift to the electronic Government Procurement system, a challenge she said has affected nearly all government agencies.
Committee chairperson Hon. Samuel Atandi commended the Auditor General for her agency’s leadership in financial discipline and early adoption of digital procurement. He noted that the Auditor General’s office was the first public institution to fully operationalise the electronic procurement platform, setting a benchmark for other entities transitioning to the new system.
Hon. Atandi also acknowledged the Auditor General’s push for stronger enforcement of parliamentary and audit recommendations. He welcomed the ongoing amendments to the Public Finance Management Act 2012 and the Public Audit (Amendment) Bill, 2025, which seek to streamline accountability mechanisms and improve responsiveness to audit findings.
Committee members raised concerns about the growing stock of pending bills across national and county entities and sought clarification on the timelines for auditing such liabilities. They also requested the Auditor General’s assessment of the electronic procurement system, given the disruptions experienced since its roll-out.
In response, FCPA Gathungu emphasised the need for legislative reforms to introduce individual responsibility for accounting officers, arguing that fiscal indiscipline at the institutional level is the dominant cause of pending bills. She maintained that the PFM Act should be strengthened to hold officers personally accountable when procurement commitments are made without available funds or when payments are unduly delayed.
On the matter of audit timelines, the Auditor General recommended that MDAs submit financial documentation to her office on a monthly basis rather than quarterly. She argued that more frequent submissions would allow early detection of emerging risks and help reduce audit bottlenecks that often occur towards the end of the financial year.
Addressing the Committee’s concerns about her own office’s first-quarter absorption performance, FCPA Gathungu defended the figures by attributing the delays to widespread procurement challenges under the digital system. She noted that the disruptions had affected most MDAs and county governments, slowing approval processes and contract execution.
The Budget and Appropriations Committee is set to conclude its engagements with the Controller of Budget, FCPA Dr. Margaret Nyakang’o. Following these consultations, the Committee will draft a comprehensive report to guide the National Assembly and inform the forthcoming budget cycle. The findings are expected to influence revisions to budget implementation frameworks, procurement timelines, audit submission rules and the overall fiscal oversight architecture.
The ongoing review comes at a time when Kenya is seeking to balance budget consolidation with economic recovery efforts. With revenue mobilisation still below target and public debt obligations rising, the efficiency of budget execution is under heightened scrutiny. The Auditor General’s recommendations, coupled with parliamentary oversight, are expected to shape reforms aimed at improving accountability, accelerating development delivery and reducing fiscal pressures across government entities.
