Economy

Govenors now free to decide Sh17.4bn usage

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National Treasury Cabinet Secretary Ukur Yatani. FILE PHOTO | NMG

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Summary

  • The Treasury will drop restrictions on use of Sh17.4 billion for healthcare, roads and education sectors in counties, allowing governors to use the cash on expenditures of their choice including for salaries and perks.
  • Finance Cabinet Secretary Ukur Yatani said since the national government has to bear the burden when there is shortfalls in revenues without cutting transfers to counties it will use conditional grants to make up for the shortfalls.
  • Counties are entitled to an equitable share of revenues plus discretionary funds from the national government specifically earmarked for certain projects

The Treasury will drop restrictions on use of Sh17.4 billion for healthcare, roads and education sectors in counties, allowing governors to use the cash on expenditures of their choice including for salaries and perks.

Finance Cabinet Secretary Ukur Yatani said since the national government has to bear the burden when there is shortfalls in revenues without cutting transfers to counties it will use conditional grants to make up for the shortfalls.

Counties are entitled to an equitable share of revenues plus discretionary funds from the national government specifically earmarked for certain projects

“If the actual revenue raised nationally in the financial year falls short of the expected revenue, the shortfall shall be borne by the national government, while county allocations have to be disbursed in full,” Mr Yatani says in the budget policy draft for the year starting July.

“We propose to allocate to County Governments Sh370 billion as their equitable revenue share arrived at by converting four existing conditional grants to county governments into unconditional grants, and allocating the respective amounts totalling Sh17.4 billion towards the Counties,” CS Yatani said.

The CS said the conversion of the four conditional grants as proposed has several advantages as it will give counties freedom to plan for use of their funds on need basis.

Treasury Secretary Ukur Yatani says that the change will enable the 47 devolved units to improve absorption of funds.