Treasury delays in funds transfer hurt counties devpt. budget, study finds

debt

The National Treasury’s failure to disburse funds to counties on time has been attributed to low absorption rate of development budget.

According to a study by the by Institute of Economic Affairs (IEA), late receipt of funds from the exchequer has led to budget revisions among the devolved units leading to further delays in spending.

“Counties spend only about 60% of the amounts planned in their original development budgets. In other for every Kshs. 100 that all the 47 counties budget for development programs and projects, they spend on average Kshs. 60,” said IEA.

The institute says within the six financial year beginning 2014/15 to 2019/20, late disbursement of funds by the treasury has led to revision of development budgets 53 times.

Due to the complexity of the intergovernmental transfers system, counties have also been hit by numerous labour strikes by medical personnel, stalled projects including roads and markets, drug stock outage and piling pending bills owed to suppliers.

“In part, most of these issues can be traced to disruptions counties continue to experience in budget implementation and service delivery as a result of delays in disbursement of funds by the National Treasury. Insufficient revenue collection at the national level has invariably compounded the intergovernmental transfer process. Important to note too other in-county challenges including laborious requisition process and documentation requirement to trigger release of funds also contribute to further delays,” said the institute.

As a result of the delays, IEA says total spending at the county level is declining given that the equitable share as transferred to counties has fallen to 4% of GDP to 2.8% over the six financial year period.

IEA now recommends that parliament needs prioritize approval timelines for Division of Revenue Bill and County Allocation Revenue Bill as soon as they have are tabled in order to address delays in release of funds to counties.

Additionally, the Senate and the National Assembly have been urged to ensure that The National Treasury matches the revenue disbursement schedule with the revenue forecasts besides ensuring the disbursement process is digitized and decentralized in order to minimizing requirements for the process of formal requisition of monthly exchequer issue.

  

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