Sh48bn withheld disbursement triggers cash crunch in counties

The National Treasury failed to transfer Sh48 billion to counties at the end of the financial year to June, triggering a cash crunch in the devolved units.

Counties were entitled to Sh362.8 billion from the Treasury, which comprised Sh316.5 equitable share and 22.8 billion conditional grants.

The Sh48 billion balance is an improvement of Sh50 billion compared to the Sh98.8 billion that the Treasury owed counties in the corresponding period a year ago.

County governors have repeatedly blamed delayed disbursements for their woes, including industrial action and stalled projects.

Counties were starved of cash for the three months to September 2019, resulting in delays in paying suppliers and workers’ salaries.

Treasury Cabinet Secretary Ukur Yatani has maintained that releasing the equitable share of revenue to counties would be pegged on honouring verified bills.

This came in the wake of ballooning pending bills in the devolved units leading to cash-flow problems for contractors and suppliers, crippling their operations.

By the end of January, the 47 devolved units had paid out Sh33.35 billion, which helped settle 59.28 percent of the Sh51.2 billion pending bills validated by the Auditor-General as of June 2019.

The delay experienced in the three months to September was caused by a stalemate over a bill that guides revenue sharing between the national government and the regional governments.

The first disbursement to the counties was Sh55.5 billion, which hit the counties’ Revenue Fund accounts within a week after the Senate approved a disbursement schedule.

The schedule guides the Treasury on how to release funds and helps counties in making their budgets.