Broke Treasury blames COVID-19 for delayed county funding

The National Treasury has blamed the evolving COVID-19 virus for the delayed disbursement of funds to county governments which have since fallen behind by two months.

In a statement issued on Thursday, Treasury Cabinet Secretary Ukur Yatani pointed to containment measures effected to control the spread of the pandemic for creating widespread economic disruptions affecting government revenue raising abilities.

“Due to the adverse effects of COVID-19 and subsequent containment measures that have generally slowed down the pace of economic activities, the disbursements to counties are indeed falling behind by two months,” he stated.

To this point, the exchequer has only transferred Ksh.133 billion to county government for the financial year ending on June 30. This includes Ksh.120.2 billion from the counties equitable share, representing a mere 38 per cent of the expected Ksh.316.5 billion annual disbursement halfway through the financial year.

The balance of Ksh.13 billion meanwhile represents disbursements from conditional grants.

Thursday’s press release by the National Treasury was an admission of a broke government as the State hurts from lower than expected revenues.

According to data contained in the National Treasury statements of actual exchequer issues, tax collected through the first quarter of the fiscal year to September was down by 15 per cent from 2019.

The slack in collections has continued unabated with Kenya Revenue Authority (KRA) collections falling by 22 per cent in November as per the latest available data.

The National Treasury is however banking on the recent reversal of tax relief measures to grow revenues and increase its disbursements to county governments in coming months.

“With the opening up of the economy and the reversal of the COVID-19 tax relief measures, the National Treasury expects revenue collection to improve and will prioritize disbursements to county governments with a view of clearing the arrears,” added CS Yatani.

The emaciated funding to Counties has disrupted the provision of services in the devolved units with the Council of Governors (COG) recently threatening to trigger a shutdown in the units to protest the low disbursements by the National government.

As of Wednesday, balances of county governments at the Central Bank of Kenya (CBK) stood at just Ksh.34.6 billion.

County governments have previously expressed difficulties in meeting key payments including staff salary benefits as the government runs broke.