A new Senate bill proposes reorganizing the National Treasury into a separate agency responsible for disbursing cash.
Separation of the National Treasury from the Ministry of Finance is an objective of the proposed National Treasury Bill, 2023.
Senator Enoch Wambua of Kitui has introduced legislation to address what he calls bias in the distribution of federal and county tax revenues.
The Deputy Minority Leader in the Senate has said that there is bias against counties in the way federal funds are distributed by the Treasury as it currently stands.
The National Treasury and the Ministry of Finance are being split up under We Bill. Wambua explained that the National Treasury would focus primarily on disbursements while the Ministry of Finance would handle the interests of the government at large.
The National Treasury will be separated from the government like the Controller of the Budget and the Auditor General under the new law.
“The Bill provides that once KRA collects the cash and the Controller of Budget approves the disbursements, it will be the work of the National Treasury to disburse,” the senator from Kitui explained.
The bill is at the pre-publication stage, where it will be given to the Finance and Budget committee for review before being sent to Speaker Amason Kingi for approval. This will clear the way for the bill to be published and introduced on the floor.
The Treasury has blamed difficulties in collecting taxes and a large public debt load for months of cash flow problems in the counties.
The Commission on Revenue Allocation recommended splitting up the Finance Ministry and the Treasury to remove the ‘unfairness’ that has left counties permanently broke, yet this Bill doesn’t even come until five months later.
The Treasury should once again be operated jointly by the federal and state governments. Lineth Oyugi, CRA’s head of economics, recommended in April before the Senate Finance and Budget Committee that the agency be established as a separate entity.
It had been three months since the Treasury had sent money to the counties.
Treasury’s alleged use of ‘budget constraints’ to justify its refusal to pay out devolved unit monies was disputed by CRA.
The Treasury is meant to serve as both the federal and state treasury. However, “what’s happening is that the Treasury is increasingly defending the national government,” as noted by Oyugi.
“You know there is not a single employee of the national government and its institutions, including MDAs [Ministries, Departments, and Agencies], who hasn’t been paid in full for three months.”
If the Treasury’s cash flow concerns are real, as Oyugi claims they are, then the entire county and national government should feel the pinch.
If the National Treasury is telling the truth about the current cash crisis, she continued, “then none of us should have been paid for the past three months.”
For late fund transfer to counties, the Treasury frequently cites severe cash flow issues.
Treasury Cabinet Secretary Njuguna Ndung’u had previously observed, “We are caught up between two extremes: high level of debt financing and financing constraints due to limited access to finance in domestic and international financial market.”
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