Africa-Press – Kenya. The National Treasury could be headed for a clash with the counties after revelations that the devolved units entered the second month of the financial year without disbursements.
This even as Controller of Budget Margaret Nyakang’o warned that the counties are staring at serious audit queries after the Treasury allowed them to spend last year’s cash beyond June 30.
The CoB revealed the 47 devolved units have yet to receive allocations for July and August, signalling the possibility of yet another cash crisis.
“The counties have not received a penny for this financial year. All the national government agencies have received their allocations for July,” Nyakang’o told the Star.
The counties were allocated Sh370 billion as shareable revenue in the current financial year, up from Sh316.5 billion in 2020-21.
According to the Public Finance Management Act and Cash Disbursement Schedule developed by the Treasury and approved by Senate, the counties are supposed to receive funds by the 15th day of every month for next month’s expenditure.
Article 2020 of the Constitution stipulates that revenues raised nationally shall be shared equitably among the national and county governments.
The funds allocated to county governments shall not be less than 15 per cent of all revenue collected by the national government, the Constitution provides.
The last financial year was characterised by frequent delays in disbursement. The releases fell due by more than four months.
At one time, governors, through their umbrella body, the Council of Governors, threatened to shut down because of persistent and prolonged delays by Treasury CS Ukur Yatani to release the cash.
The delays affected crucial operations of the counties with employees going for months without salary.
“Unfortunately, if the National Treasury fails to release the funds, counties will not be able to offer basic services, thereby forcing the suspension of services or shut down by June 24,” Council of Governors chairman Martin Wambora said on June 13.
The counties received their final batch of disbursement —Sh26.9 billion, which had accumulated for more than four months—on June 29.
As such, they could not spend the cash within the remaining one day to the closure of the fiscal year, forcing the Treasury to extend their expenditure period to July 15 the following year.
“Because money was released late in June, the Treasury allowed Ifmis to open for two weeks to enable the counties to make payments,” Nyakang’o said.
“As far as Ifmis is concerned, they were sweeping that (money) as June 30 payment because the money was actually released on June 29.”
The CoB warned the expenditure of last year’s money in the new financial year without regularisation will raise serious audit queries as the funds were budgeted for in the previous year.
“It will bring audit issues but it was a serious cash-flow problem. Treasury was trying to cure their own disease,” she said.
Cash-flow problems occasioned by the reduced revenue collections by the Kenya Revenue Authority due to the Covid-19 pandemic, heavy loans and increased needs attributed to the disbursement delays.
-Edited by SKanyara
