Treasury releases Sh26.9bn to counties to clear 2020/21 equitable share debts
Council of Governors chairperson Martin Wambora (left) Cabinet secretaries Eugene Wamalwa (Devolution) and Ukur Yatani (Treasury) at a past event in Nairobi. Treasury has released Sh26.9 billion to counties.
The National Treasury has finally cleared debts owed to county governments in equitable share funds, following the release of Sh26.9 billion, after a meeting between the ministry and Council of Governors (CoG).
In a joint press statement on Friday, Treasury CS Ukur Yatani, CoG chairman Martin Wambora (Embu) and his vice James Ongwae (Kisii), announced that Treasury had previously released a total of Sh289.6 billion equitable share funds to counties, and that the new Sh26.9 billion- allocation for June 2021, made the entire Sh316.5 billion settled.
“The outstanding balance amounting to Sh26.9 billion allocation for the month of June 2020/21 shall be released today (July 2), thus making a total of Sh316.5 billion, as allocated to County Governments in Division of Revenue Act, 2020,” the parties stated.
They also added that a sum of Sh28.5 billion had been released to counties as Conditional Grants over the financial year, as Treasury called on the devolved units to prioritise paying pending bills.
Release of money comes after months of heated debates over Treasury’s delays in disbursing money to counties. Counties had threatened shutting down operations to protest the delays, before some Sh43 billion was released on June 23.
Pending bills
“The National Treasury and leadership of the Council of Governors further agreed that County Governments will prioritise the settlement of pending bills with the resources that have been released for Financial Year 2020/21. This will enable Counties to meet their important obligation to the private sector and spur economic activity at the county-level as part of the ongoing and inclusive Economic Recovery Programme,” they said.
Following the release of Sh43 billion to counties late last month, Treasury had attempted to pressure counties to use the money settling the debts, but CoG was adamant, indicating that until all the money was disbursed, they would not settle them.
In a statement following release of the money on June 23 and acknowledging the goodwill by Treasury, Mr Wambora indicated that the national government still owed counties over Sh58 billion, which would be used to settle the pending bills, if released.
Appearing before Senate early June, CS Yatani had told senators that counties had accumulated between Sh80 billion and Sh90 billion in pending bills, adding that together with the office of Controller of Budget, Treasury had formed a committee to scrutinise the debts.
Huge balances
He urged lawmakers to enact laws compelling counties to settle pending bills, as he threatened that the Treasury would not disburse funds to counties that either had pending bills or had huge balances in the Counties’ Revenue Fund (CRF).
“The National Treasury shall give county governments adequate time to process and transmit payments through the Integrated Financial Management Information System (IFMIS),” the joint statement read.
The announcement also indicated that Treasury had reached a deal with CoG to “continue consulting and cooperating on issues regarding public finance management, so as to ensure uninterrupted service delivery to citizens.”
Mr Yatani has been blaming impacts of the Covid-19 pandemic on revenue collections as the cause for delays in disbursement to counties. Since October last year, many counties have experienced the delays, where release to some counties was even falling three to four months behind.
“And it is not only the counties where we are lagging behind in disbursements, even the Ministries, Departments and Agencies (MDAs) are experiencing the same problem,” Mr Yatani told senators last month.
He had already indicated that counties would have to wait until the current FY to receive their June disbursements, saying the government was experiencing shortages in inflows.
