Treasury disburses Sh43.5b to counties, prevents shutdown

Thursday, June 24th, 2021 00:00 |
National Treasury Cabinet Secretary Ukur Yatani on his way to Parliament Buildings for the presentation of his 2021/22 Financial Year Budget on June 10. Photo/PD/file

Steve Umidha @UmidhaSteve

National Treasury yesterday disbursed Sh43.5 billion to county governments.

The move is a huge relief to governors who had threatened to shut down operations to protest the delay in remittance of funds running into hundreds of billions of shillings.

It comes just under a week before the financial year ends on June 30.

“The National Treasury & Planning (NTP) wishes to confirm that an additional Sh43.5 billion was released to County Governments on Tuesday 22 June, 2021, thereby clearing dues up to April 2021,” reads a statement signed by Treasury Cabinet Secretary Ukur Yatani.

In utilising the money, county governments are required to prioritise paying of pending bills.

“The payment of these pending bills will be closely monitored and future transfers weighed against the fulfilment of this important obligation to the private sector, so as to spur economic activity at the county level as part of our ongoing and inclusive Economic Recovery Programme,” said Yatani while releasing the funds.

Governors had threatened to shut down counties this week, citing lack of funds to run operations.

Through the Council of Governors (CoG), the county chiefs had expressed frustration about the delayed disbursement, saying it had crippled delivery of critical services.

Basic services

The money is expected to be a relief to staff, suppliers and contractors who have borne the brunt of a cash crunch in the counties for the better part of the year.

Nairobi, Kakamega and Nakuru counties will receive the lion’s share of the money at Sh3.6 billion, Sh2.1 billion and Sh2 billion respectively. 

Other big beneficiaries are Kwale, Kilifi and Kiambu counties who will receive Sh1.4 billion, Sh1.2 billion and Sh1.2 billion respectively.

Marsabit, Migori and Murang’a counties will each receive over Sh1 billion.

CoG chairman Martin Wambora (Embu County) last week said the Treasury was holding Sh102.6 billion belonging to counties.

With the latest disbursement, the total balance Treasury owes counties is Sh59.1 billion.

“If the National Treasury fails to release the funds, counties will not be able to offer basic services thereby forcing suspension of services or total shutdown by June 24,” Wambora said in a press conference at the Council’s headquarters in Nairobi.

Machakos Governor Alfred Mutua had termed the delay in disbursement of funds a “sabotage to devolution”. 

“We now want to meet the President to end this problem because it’s the members of public who will suffer. If by Monday things will not have changed, I will tell my employees to stay at home because there is no money to run the county,” Mutua told the press in Mombasa.

Kericho Governor Paul Chepkwony had said lack of funds had crippled health services and delayed payment of salaries.

Last year, counties went for four months without money from the Treasury which caused disruptions of operations and salary delays. In September 2019, governors halted operations for a similar reason.

In his Budget speech on June 10, Yatani said counties had until the end of June to clear pending bills, failure to which they risked being denied more funds. 

Pending Bills Fund

The Treasury had also threatened to stop the transfer of money to State agencies that would not comply with the bills directive.

“Delays in payment of pending bills to businesses who provide services to both National and County governments has affected liquidity and operations of these entities. In a number of cases, this has led to closure of businesses and affected the livelihoods of the suppliers.

Though progress was made in settlement of these bills by the National Government, we still have challenges with the County Governments that still owe various suppliers huge amounts,” Yatani said.

He direct government ministries, departments, agencies and county governments to clear all pending bills by June 30.

In April, Yatani ordered ministries, State departments and agencies to submit reports on the status of pending bills.

It is, however, believed that many of the entities had not complied with the directive.

The situation is worse at the national level where an estimated Sh300 billion is owed suppliers by the national government. 

Ministries such as that of Transport and Infrastructure owe in excess of Sh99 billion to suppliers, while Sh31 billion are due to land owners who surrendered their parcels for infrastructure development.

The Budget committee of Parliament is proposing the establishment of a Pending Bills Fund to be set up. The fund would be financed using long-term bonds.

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