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Economy

Treasury funds to counties hit Sh205bn in March

Council of Governors chair Wycliffe Oparanya
Council of Governors chair Wycliffe Oparanya. FILE PHOTO | NMG 

Allocation to counties in the nine months to March rose 17.8 per cent to 205.6 billion in an upturn after surviving the first two months of the financial year without a coin.

Counties had received Sh174.5 billion in a similar period last year when the devolved governments delayed suppliers’ pay and workers’ salaries as well as froze projects.

In the two months to August, none of the 47 counties had received a cent of the Sh314 billion they are entitled to as an equitable share of national government revenue.

The delayed exchequer release coupled with poor own-revenue collections resulted in a cash crunch that saw counties struggle to meet their financial obligations in good time, leading to an increase in pending bills.

As of June 30, 2018, pending bills in county governments had accumulated to Sh108.41 billion, with Controller of Budget Agnes Odhiambo attributing this partly to the delayed disbursements by the National Treasury.

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The Constitution requires the Treasury to disburse to the counties a share of revenue by the 15th date of every month.

Ms Odhiambo has also linked the ballooning pending bills to counties overstating their revenues and overcommitting to suppliers.

She warned that the counties were likely to continue facing cash flow challenges as long as they kept spending on an assumption of 100 per cent revenue collection.

Delayed dispatch of funds has led to projects stalling, delayed workers’ salaries and frozen payments to suppliers, slowing down operations in the regional governments.

Some counties are grappling with lawsuits from suppliers and contractors following failure to keep their end of the bargain.

In the nine months to march, Nairobi got the lion’s share of Sh9.3 billion, followed by Kiambu (Sh8.5 billion), Kakamega (Sh7.7 billion) and Nakuru (Sh6.8 billion).

Lamu received the least (Sh2.2 billion) followed by Tharaka Nithi and Elgeyo Marakwet at Sh2.24 billion and Sh2.3 billion respectively.

The Treasury has in the past blamed the country’s financial situation on failure by the Kenya Revenue Authority to hit its projected tax collection targets.

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