Counties miss targets as cash crunch hits National Treasury

Cabinet Secretary for the National Treasury and Planning Henry Rotich at treasury with the budget briefcase at the treasury building on June 14, 2018. [David Gichuru, Standard]

County governments are staring at a looming cash crunch as the National Treasury is yet to disburse more than a third in equitable share meant for the devolved units.

The latest Treasury expenditure report indicates counties had received just Sh205 billion as at March 29 from the Sh338 billion set aside for the 2018/2019 financial year.

This leaves a funding gap of Sh133 billion less than three months to the end of the financial year, scuttling counties’ ability to settle pending bills and administrative costs, and slowing down development projects.

At the same time, at least 13 counties are grappling with effects of the worst drought in four decades, expected to get worse in coming months, following the failed March-May long rains.

Turkana, Marsabit and Isiolo are among those flagged as in need of urgent humanitarian aid from the drought but have received just 57 per cent of their approved disbursements for the current financial year.

Nairobi City County has received Sh9 billion of the Sh15 billion expected allocation, with Kiambu and Kakamega among the highest recipients of the equitable share at 73 and 68 per cent of their budgets respectively.

County governments are currently saddled with over Sh100 billion in pending bills owed to suppliers and creditors with governors and senators routinely blaming the National Treasury for worsening the situation with delayed disbursement of budgetary funds. 

In the 2017/2018 financial year, the Council of Governors wrote to Treasury asking for speedy disbursement of county allocations to prevent operations grinding to a halt.

“Counties are facing a tight financial crisis as we have received 33 per cent of the expected 75 per cent of the equitable share for the current financial year,” said Governor Josephat Nanok in March last year.

“Only three counties have surpassed 50 per cent of their total equitable share and the little disbursement we have received so far has gone towards payment of salaries and other recurrent expenditure,” he said.

Treasury on the other hand is struggling to raise funds to finance the hefty Sh2.29 trillion budget for the current financial year. Kenya Revenue Authority has only raised Sh1 trillion of the Sh1.6 trillion targeted for the year.

This has seen the Government resort to a raft of austerity measures that have largely targeted county allocations and development spending.

Of the Sh363 billion allocated for development expenditure in the current financial year, only Sh197 billion (55 per cent) has so far been disbursed.

The Sh166 billion funding gap has seen several development projects either slowed or stalled as ministries and State departments await more funds.

The Ethics and Anti-Corruption Commission, Director of Public Prosecutions and Teachers Service Commission, for example, have received no allocations of their development expenditure - Sh125 million, Sh100 million and Sh136 million respectively.  

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