Counties face spending rush as Treasury releases Sh68 billion days before year-end

County governments have been handed a massive cash injection just days before the end of the financial year, setting the stage for a scramble to spend more than Sh68 billion before government financial systems close on June 30.

The National Treasury on Tuesday released Sh35.27 billion to counties for May, while Treasury Cabinet Secretary John Mbadi assured senators that the June allocation of Sh33.20 billion would also be sent before the financial year comes to an end.

The planned release means county governments could receive a combined Sh68 billion within less than a week, leaving them with a narrow window to implement spending plans before the Integrated Financial Management Information System (IFMIS) is shut down for year-end closure.

“We will try from the National Treasury to make sure we do not close the year with any pending funding to the counties,” Mbadi told the Senate last week.

The development has once again put the spotlight on delays in the release of county funds, a problem that governors and lawmakers have repeatedly raised over the years.

With only a few days left before the close of the financial year, counties are expected to face challenges in absorbing the funds, increasing concerns over project implementation and financial accountability.

Any money that remains unused after June 30 cannot be spent through IFMIS and will have to be carried forward into the next financial year.

The delayed transfers are also likely to affect county budget plans, force adjustments in spending programmes and slow down the implementation of development projects. There are also fears that pending bills could continue to grow if funds are not utilised as planned.

The latest disbursements reflect a trend that has persisted despite existing laws meant to guarantee timely funding for devolved units.

The Public Finance Management Act, 2012, requires the National Treasury to transfer counties' equitable share of revenue by the 15th day of every month. County governments, however, have frequently complained that the requirement is not consistently met.

The issue dominated discussions when Mbadi appeared before the Senate last week, with lawmakers seeking answers on why county allocations continue to arrive when the financial year is almost over.

Kitui Senator Enoch Wambua cautioned that releasing funds at the tail end of the financial year places county governments in a difficult position and increases the likelihood of audit concerns.

“When the National Treasury releases funds to counties towards the end of a financial year to finance activities of a financial year that is coming to an end in four days, that automatically leads to audit queries for county governments,” Wambua said.

He challenged the Treasury to explain the criteria used in planning exchequer releases and how it intends to ensure counties receive allocations in good time to implement approved budgets and account for public spending effectively.