Kenya to pay 1.9 billion more to global membership bodies on weak shilling
AU headquarters in Addis Ababa, Ethiopia.
What you need to know:
- Kenya last year paid Sh4.9 billion in subscriptions to maintain the country’s membership in various global bodies.
- The country set aside Sh7.21 billion under the African Union and Other International Organisations Subscription Fund in the year to June 2021.
Kenya will pay Sh1.9 billion more in subscriptions to the African Union and other international organisations due to the depreciating value of the shilling against world currencies.
The National Assembly’s Finance and National Planning committee heard that the African Union and Other International Organisations Subscriptions Fund is set to rise by Sh1.886 billion on account of the drop in the value of the shilling compared to other hard currencies.
The money has been factored in the Supplementary Estimates I that was tabled in Parliament two weeks ago.
The Fund, which is domiciled at the Treasury, covers the payment of international subscriptions made by the government to various international organisations through the different ministries.
All payments made to international bodies are centralised at the National Treasury, with ministries forwarding invoices for their subscriptions.
“The reason for the increment in the Fund is due to the drop in the value of the shilling compared to the hard currencies in which the international subscription invoices are usually denominated, such as the Euro, US dollar, or British Pound, among others,” a brief presented to the committee states.
“When the value of the shilling decreases in these currencies, the increase in the fund is meant to offset that difference and ensure that the government can fulfil its financial obligations for international subscription.”
The Parliamentary Budget Office (PBO), which advises MPs on budget and fiscal matters made the disclosure of an increase of Sh1.89 billion during the scrutiny of the Supplementary Estimates I.
The committee chaired by Molo MP Kuria Kimani is scrutinising the budget adjustments for the National Treasury and semi-autonomous government agencies under it.
Kenya last year paid Sh4.9 billion in subscriptions to maintain the country’s membership in various global bodies.
The country set aside Sh7.21 billion under the African Union and Other International Organisations Subscription Fund in the year to June 2021.
However, the country did not spend Sh2.3 billion or 68 per cent of the total subscription budget due to the fact that the fund received invoices amounting to Sh4.9 billion from international organisations to which Kenya is a party.
“There is a need for management of the fund to review its budget-making process with a view to formulating a realistic budget that would be actualised during implementation,” Auditor General Nancy Gathungu said in a report to Parliament.
The Public Finance Management (African Union and Other International Organisations Subscription Fund) Regulations 2017, established the African Union and Other International Organisations Subscription Fund through which Kenya’s contribution to the African Union and other international organisations across all government agencies is to be paid.
Kenya is a member of several international and regional international organisations including the Common Market for Eastern and Southern Africa Comesa), the African Union, the Intergovernmental Authority on Development (Igad), and the East African Community (EAC) and pays annual subscriptions.
It also serves as a major regional hub for the United Nations, multilateral organisations and diplomatic missions.
Ms Gathungu has previously raised concern over multiple laws guiding the operations of the fund and wants the government to revoke or repeal earlier laws to avert the risk of making double payments to international organisations.
Ms Gathungu said the establishment of the Fund in 2017 has therefore rendered all other individual-voted provisions to be consolidated and budgeted under one umbrella body.
“Management has not caused the revocation or repealing of the earlier laws to be in tandem with the current legislation and therefore avert the risk of making multiple payments to the international organisations,” she said in the latest audit report to Parliament.
