The National Treasury Building in Nairobi.
The National Treasury faces an uphill task to release Sh162.7 billion in the equitable share of revenues to counties over the three months to June, following a Sh58 billion shortfall in the payouts made since July 2024.
Article 202 of the Constitution requires that revenue raised nationally be shared equitably among the national and county governments.
Records show that by the end of March, Treasury had disbursed Sh255.54 billion to the counties, leaving the balance equivalent to Sh54.24 billion in monthly instalments in April, May and June.
The remaining balance is set to exert more pressure on the National Treasury, whose disbursements to counties over the nine months to March averaged Sh28.39 billion monthly.
The Treasury is supposed to send a total of Sh418.26 billion in equitable share to counties during the current fiscal year.
“The revised estimates of Sh418,258,969,281 comprise an equitable share of Sh387,425,000,000 and arrears for June 2024 Sh30,833,969,281,” Treasury notes in the latest statement of revenues and exchequer issues.
The Sh30.83 billion arrears, forming part of the current year’s budget, resulted from Treasury’s failure to disburse all the equitable share revenue owed to counties during the year ending June 2024.
County governments rely on the equitable share disbursed by the National Treasury to pay salaries, fund development projects and settle bills owed to contractors.
But the counties have been forced to endure delayed disbursement of the money amid revenue shortfalls and mounting debt payments.
Delays in cash disbursements to counties impact their service delivery and payment to suppliers and contractors, which has been blamed for the growth in pending bills.
Even in the current fiscal year, governors have complained of delays in releasing the equitable share of revenues, which often leaves counties unable to deliver some services.
Two counties have attributed the cancellation of thousands of payments to suppliers to delays by the Treasury to release the money during the last fiscal year.
“The payments are voided when there are no sufficient funds in the CRF (County Revenue Fund) to pay them, yet the IFMIS (integrated financial management information system) system has to be cleared for the beginning of a new financial year,” Kisumu County’s Finance Minister George Omondi said.
Embu Governor Cecily Mbarire last week also attributed the cancellation of 716 transactions during the last fiscal year to delays by the Treasury to release funds, noting that a Sh454 million disbursement came in July after the closure of the financial year.
“Towards the end of the financial year, the county processes transactions that are due for payment as we wait for Treasury to release the money. When the money doesn’t come from Treasury is when the counties void transactions and roll them over to the subsequent year where they are included in the supplementary budget,” she said.
During the year, 15 counties cancelled 15,008 transactions valued at Sh13.26 billion.
Treasury failed to release Sh30.83 billion to counties during the year, carrying them forward to the current fiscal year.
Many counties are presently heavily reliant on the equitable share of revenue mainly due to their low own-source revenues that have adversely hit their ability to operate smoothly.
