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The National Treasury wired Sh32.8 billion to counties in September, marking the first disbursement to the devolved units in the new financial year after clearing a legal hurdle that had frozen the release of funds.
Reintroduction of the County Allocation of Revenue Bill and the Division of Revenue Bill after the withdrawal of the 2024 Finance Bill led to the freezing of county funding, triggering a cash crunch in the devolved units which hurt key areas such as workers’ salaries.
The Treasury revealed that it has begun fresh disbursements to counties on the advice of the Attorney General Dorcas Oduor’s office. It said the A-G’s office has allowed for the disbursement of funds of up 50 percent of the previously approved county funding framework.
“Funding to counties was not a problem of the exchequer as such as was largely a legal issue. There are legal experts who felt that we couldn’t give the counties money unless Parliament passes the county revenue allocation bill and the division of revenue bill,” Treasury Cabinet Secretary John Mbadi said.
“I personally wrote to the Attorney General to get her opinion, and it is in concurrence with my thinking and so we’ve started disbursing funds. I am aware that we will be releasing the August allocation this week so we will only be in arrears for September.”
The statement of actual exchequer revenues and net exchequer issues covering the period to September 30, 2024, reveals the fresh funding which complements Sh30.8 billion sent to the units earlier in this financial year to cover arrears from the 2023/24 fiscal period.
Counties have now received a combined Sh63.5 billion since July 1 including the arrears for June 2024.
The initial allocation to counties under the equitable share amounted to Sh400.1 billion in the original budget and was amended to Sh380 billion following the withdrawal of the Finance Bill, 2024.
The County Governments Additional Allocations Bill, 2024 provides a further Sh55.4 billion to the units with the amount to be disbursed through ministries, departments, and agencies according to the exchequer.
Both the county revenue allocation and division of revenue bills remain under consideration in Parliament.
The Public Finance Management Act, of 2012 allows the Controller of Budget to approve withdrawals of up to half of the previous year’s equitable share from the consolidated fund in the absence of a County Allocation of Revenue Act.
Previous delays in funding counties have been attributed to the underperformance of revenues.
The exchequer says it’s seeking to clear arrears to counties by the end of the calendar year.
“My strategy is to have all of the arrears cleared by the end of the calendar year 2024,” Mr Mbadi said.
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