Kenya: Governors demand billions in interest from Treasury over delayed monies

Council of Governors’ Chair  of Finance Committee Wycliffe Oparanya

NAIROBI: Governors have demanded that Treasury pays billions of shillings in interest on the funds that it has allegedly delayed to release to county governments for the last two months.

This comes as the blame game between Governors and Treasury on the alleged delays in release of county funds intensified Monday.

Speaking Monday in Nairobi, Council of Governors Chairman of the Finance Committee Wycliffe Oparanya said that every time there is a delay in the release of county funds, Governors will demand interest at the current market rates to discourage future delays.

"Governors have always consulted the treasury on the issue of late cash disbursement to county governments with a promise from Treasury that subsequent disbursements shall be made on time. This has not been achieved," he said in response to a press statement published by Treasury in newspapers on Sunday.

He added: "The Council of Governors is therefore making a stand that moving forward the national government should pay interest to each affected county of any late disbursement for the period of which the disbursements were late."

The Governors also accused Treasury and national government officials of deliberate misinformation about the delayed disbursement of funds to the counties.

Oparanya, who is the Kakamega Governor, wondered why the national government has only released 86 per cent of the total allocations to counties even as the 2014/2015 financial year is coming to an end today.

"Why should be talking about 86 per cent disbursements and not 100 per cent? All the matter that was allocated in the 2014/2015 financial year should have been disbursed before 15th of this month. What is going on?" wondered Oparanya.

He added: "This alone shows that the Treasury is insincere and out to frustrate the development agenda of county governments. The political will in the national government to resolve this issue is lacking."

Oparanya insisted that contrary to claims to Treasury, most counties have not received their allocations for May and June this year and will be compelled to draw up fresh budgets when the monies are finally released.

He dismissed claims by Treasury that Counties have huge balances in the bank while claiming that they are unable to pay salaries. He said that the balances could be money already committed to projects and was not just lying idle.

He said that disbursement of county funds should not be based on balances in the bank accounts of county governments as such a requirement is not provided in the law.

On Sunday, Treasury Principal Secretary said disbursing funds to the counties in any month, priority is given to counties with the least fund balances in their bank accounts at the Central Bank of Kenya in order to ensure services are not disrupted.

"Some people are behaving that the money given to counties is a favour. They have not really accepted that devolution is here to stay. The money does not belong to officials at Treasury to give out at their own whims. It belongs to Kenyans," he said.

Oparanya demanded that funds should be allocated to counties on a quarterly basis as enshrined in the Public Finance Management Act and not on a monthly basis, saying the monthly arrangement is prone to major delays.