The Treasury has asked Parliament to approve its decision stopping the release of funds to 15 counties for failure to clear Sh22.71 billion in pending bills.
National Assembly Speaker Justin Muturi directed the Budget and Appropriations Committee (BAC) to speedily consider the request by the Treasury to freeze the transfer of funds from next month.
Business owners have accused national and county government departments of delaying payments to suppliers worth more than Sh150 billion, forcing them to cut back on operations, shed jobs and keep pay stagnant.
“I direct the committee to investigate and find out whether the Acting Treasury secretary Ukur Yatani complied with Public Finance Management (PFM) Act, 2012 in seeking this House approval to stop funds to the affected counties and report within the set timelines,” Mr Muturi said while communicating Mr Yatani’s request to MPs.
The law requires the Treasury to seek House approval before stoppage of transfers of equitable share of revenue to counties.
Section 97(2) of the PFM Act, 2012, stipulates that where the Cabinet Secretary makes a decision to stop the transfer of funds to a State organ or public entity in accordance with Article 225(3) of the Constitution and provisions of the Act, the Cabinet Secretary shall stop the payment and inform the Controller of Budget.
The Controller of Budget must be informed of the date from when the stoppage of transfer of funds takes effect and the nature of serious material breaches, or persistent material breaches, committed by the State organ or public entity.
“Not later than seven days after the date of the decision to stop the transfer of funds, the Cabinet Secretary shall seek approval from Parliament,” the PFM Act states.
“Within 14 days after the decision to stop the transfer of funds, the Controller of Budget shall investigate the matter and submit a report to Parliament in accordance with Article 225 (7) of the Constitution.”
The Treasury has singled out the 15 counties for punishment after they failed to clear pending bills in a circular issued on November 22.
The 15 are Narok, Machakos, Nairobi, Vihiga, Isiolo, Tana River, Migori, Tharaka Nithi, Bomet, Kirinyaga, Nandi, Mombasa, Kiambu, Garissa and Baringo counties.
The 15 failed to pay any of their pending bills between July and October occasioning the move by Treasury to stop their funds disbursements.
Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to [email protected]