The National Treasury has suffered a big blow in its bid to have the nation- al and county governments share the burden in the event of a shortfall in revenues raised nationally.
The mediation committee of the Senate and the National Assembly that unlocked the impasse over the amounts that should be allocated to the counties in the current fiscal year rejected the Treasury bid.
“We have decided as the mediation committee that the counties will not shoulder the burden of the revenue shortfall,” Kiharu MP Ndindi Nyoro said.
Nyoro, who co-chaired the com- mittee with Mandera Senator Ali Roba, said that given the National government, through the National Treasury, makes the revenue projections and drafts the budget, it will shoulder the burden of any shortfall.
He said the national government has a bigger capacity to absorb the shortfall compared to the devolved units.
The development comes after the Treasury asked Parliament to slash Sh20 billion from the Sh400 billion initially allocated to the devolved units following the withdrawal of the Finance Bill, 2024.
The withdrawal of the Bill, trig- gered by the Gen Z protests, created a Sh345 billion budget hole. As a result, the Treasury radically revised the national budget, cutting it down by Sh325 billion and allocation to counties by Sh20 billion.
The Kiharu MP said the national government has borne 93.6 per cent of the austerity measures while counties will only bear 6.4 per cent.
In the end, the committee slashed the initial allocation to counties by Sh17 billion – to Sh387 billion from Sh400.1 billion.
However, the lawmakers reiterated that going forward, the national government would solely shoulder the cost of any shortfall in the future. In September, the Commission on Revenue Allocation opposed the Treasury’s attempt to slash the counties’ allocation due to revenue shortfalls.
“If the actual revenue raised nationally in the financial year falls short of the expected revenue set out in the schedule, the shortfall shall be borne by the national government,” CRA said.
Treasury Cabinet Secretary John Mbadi said the country was operating on a tight fiscal space due to a low ordinary revenue collection shortfall of at least Sh316.7 billion in the previous financial year leading to budget cuts across both levels of government.
The CS had said that out of Sh2.63
trillion working budget; debt servicing alone takes Sh1.1 trillion,
non-discretionary expenditures
excluding payment of salaries gobbles up Sh190.4 billion, Sh750 billion
goes to salaries and wages monthly
leaving the Exchequer with only
Sh531 billion.
