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Economy

Treasury cash to counties rises 36 per cent in the six months to December

Agnes Odhiambo
Controller of Budget Agnes Odhiambo. FILE PHOTO | NMG 

Disbursement of cash to counties rose 36 per cent to Sh115.1 billion in the six months to December after the devolved units survived the first two months of the financial year without a coin.

The latest Kenya Gazette shows cash released to counties increased by Sh31 billion from the Sh84.6 billion the devolved units received in the same period a year earlier. The increase is in sync with growth in tax collection which rose by Sh50.6 billion to Sh681 billion.

In the two months to August, counties’ operations and supplies were hard hit after the Treasury failed to release a single coin.

Delayed exchequer releases, coupled with poor own-revenue collections, has seen the devolved units struggle to meet obligations in good time, leading to swelling pending bills. As of June 30, 2018, pending bills had accumulated to Sh108.41 billion with Controller of Budget Agnes Odhiambo attributing it partly to delayed disbursements by the Treasury.

The delay led to projects stalling, late workers’ salaries and frozen payments to suppliers, slowing down operations. The Treasury was compelled to loan counties Sh20.3 billion during the cash crunch period to pay workers’ salaries. Ms Odhiambo has in the past said the pending bills problem could be linked to counties overstating their revenues and over-committing to suppliers.

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She warned that counties were likely to continue facing cash flow challenges as long as they kept spending on the assumption of 100 per cent revenue collection. In the six months to December, Kiambu got the lion’s share at Sh5.7 billion, followed by Nairobi (Sh4.9 billion), Nakuru (Sh4 billion) and Kilifi (Sh3.6 billion).

Lamu and Tharaka-Nithi received the least (Sh1.2 billion each) followed by Kirinyaga, Isiolo, Elgeyo-Marakwet and Taita Taveta (Sh1.3 billion each).

Total allocation to the counties in the current financial year stands at Sh329.96 billion.

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