The National Treasury could soon be transformed into an independent entity charged with disbursement of funds if a new Senate bill is enacted.
The draft National Treasury Bill, 2023 seeks to separate the National Treasury from the Ministry of Finance.
The bill sponsored by Kitui Senator Enoch Wambua seeks to cure what it terms discrimination in the disbursement of funds to the national and county governments.
The Senate deputy Minority leader said said the Treasury, as currently established as an entity under the national government, has demonstrated bias against counties in cash disbursements.
“We Bill is separating the Ministry of Finance from the National Treasury. We want to leave the Ministry of Finance to take care of the interest of the national government and the National Treasury to deal mainly with disbursements,” Wambua said.
In the proposed law, the National Treasury will be transformed into an independent institution similar to the Office of the Controller of Budget and the Office of the Auditor General.
“The Bill provides that once KRA collects the cash and the Controller of Budget approves the disbursements, it will be work of the National Treasury to disburse,” the Kitui senator said.
The Bill, which is likely to trigger a fierce public debate is in pre-publication stage — set to be sent Finance and Budget committee for consideration before it's sent to Speaker Amason Kingi for approval to pave the way for publication and introduction on the floor.
In the past, the counties have suffered cash crisis for months in what the Treasury attributes to revenue collection challenges and huge public debt.
The Bill comes barely five months after the Commission on Revenue Allocation rooted for separation of the Finance ministry and the Treasury to end ‘unfairness’ that has left counties perpetually broke.
“The Treasury should be re-established as a shared institution of the national and county governments. We [should] create it as an independent office,” CRA’s economic director Lineth Oyugi had told Senate Finance and Budget committee in April.
At the time, the Treasury had not disbursed funds to counties for three months.
CRA argued that the Treasury was using ‘financial constraints’ as an excuse to deny the devolved units funds.
“Treasury is supposed to be the Treasury for both the national and county governments. But what is happening is that increasingly, the Treasury defends the national government,” Oyugi said.
“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 for three months.”
Oyugi said that if it was indeed true that the Treasury faces cash flow problems, the crunch should affect all the county and national government entities.
“So, if we are in a cash crunch, that the National Treasury wants us to believe in, then all of us for the last three months, we shouldn’t have been paid,” she said.
The Treasury has often blamed acute cash flow challenges for late cash disbursement to counties.
“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,” Treasury Cabinet Secretary Njuguna Ndung'u had said.
