Kenya Faces Increase in International Subscriptions Due to Depreciating Currency
Kenya is set to pay an additional Sh1.9 billion in subscriptions to the African Union and other international organizations due to the depreciation of the country’s currency, the shilling. The National Assembly’s Finance and National Planning committee recently learned that the drop in the value of the shilling against other hard currencies will cause a rise of Sh1.886 billion in the African Union and Other International Organizations Subscriptions Fund.
This increase has been factored into the Supplementary Estimates I, which was tabled in Parliament a couple of weeks ago. The Fund, housed at the Treasury, covers the payment of international subscriptions made by the government to various international organizations through different ministries. All payments to these bodies are centralized at the National Treasury, with ministries submitting invoices for their subscriptions.
The reason behind the increment in the Fund is the decline in the value of the shilling compared to the hard currencies such as the Euro, US dollar, or British Pound, in which the international subscription invoices are denominated. When the shilling weakens against these currencies, the fund is increased to offset the difference and ensure the government can fulfill its financial obligations for international subscriptions.
The Parliamentary Budget Office (PBO), which provides advice on budget and fiscal matters to MPs, disclosed the increase of Sh1.89 billion during the scrutiny of the Supplementary Estimates I. The committee, chaired by Molo MP Kuria Kimani, is currently examining the budget adjustments for the National Treasury and its semi-autonomous government agencies.
In the past year, Kenya paid Sh4.9 billion in subscriptions to maintain its membership in various global bodies. For the year ending June 2021, the country allocated Sh7.21 billion to the African Union and Other International Organizations Subscription Fund. However, 68% of this budget, equivalent to Sh2.3 billion, was not spent because the fund received invoices totaling Sh4.9 billion from international organizations to which Kenya is a party.
Auditor General Nancy Gathungu has emphasized the need for the fund’s management to review its budget-making process in order to create a realistic budget that can be implemented effectively. She has also raised concerns about the multiple laws governing the operations of the fund and has recommended the revocation or repeal of earlier laws to avoid the risk of making double payments to international organizations.
Kenya, as a member of several international and regional organizations, including COMESA, the African Union, IGAD, and the EAC, pays annual subscriptions to these bodies. The country also serves as a significant regional hub for the United Nations, multilateral organizations, and diplomatic missions.
Overall, Kenya’s depreciating currency poses a challenge for meeting international subscription obligations. The government must manage the impact of currency fluctuations to ensure it can fulfill financial commitments to these international organizations.
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