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Cash to counties slashed by Sh8.6b in new proposals

BUSINESS
By Rawlings Otieno | Feb 21st 2020 | 2 min read
By Rawlings Otieno | February 21st 2020
BUSINESS
Treasury CS Ukur Yattani. [Wilberforce Okwiri/Standard]

Counties will receive Sh8.6 billion less in the 2020/2021 financial year in the shareable revenue should Treasury’s proposal be adopted.

The Division of Revenue Bill 2020 proposes to allocate counties Sh369.8 billion in the new fiscal year. The reduced budget is attributed to significant decrease in donor-funded additional allocations.

In the Draft Division of Revenue Bill, 2020, Treasury has retained the shareable revenue at Sh316.5 billion, but slashed conditional grants from 61.9 billion to Sh53.3 billion.

In total, devolved units will get Sh369.8 billion compared to Sh378.4 billion allocated in the 2019/2020 should the National Assembly and the Senate adopt the proposals.

The proposal is likely to push senators into a vicious fight with the MPs for more allocation to be channeled to counties.

The allocation to counties comprises equitable share of Sh316.5 billion, additional conditional allocations from the share of national government revenue of Sh13.7 billion, conditional allocations from loans and grants by development partners amounting to Sh30.2 billion and Sh9.4 billion conditional allocation from Roads Maintenance Levy Fund.

The proposal to allocate counties Sh316.5 billion as equitable share of revenue raised nationally for 2020/2021 is informed by continued under-performance in ordinary revenue, the fact that national government solely bears shortfalls in revenue and that there is a Sh161 billion funding gap in the current financial year.

Treasury CS Ukur Yatani (pictured) has said counties will get the same equitable share of the revenue of Sh316.5 billion because of the a 10.3 per cent projected contraction in national government’s net spending in the 2020-21 financial year vis-a-vis 2019-20 financial year.

In the Budget Review and Outlook Paper (BROP) 2019 and the draft Budget Policy Statement (BPS), the National Treasury had proposed an equitable share of Sh317.8 billion to country governments.

Between 2013/14 and 2018/19, 2020 BPS shows cumulative ordinary revenue shortfalls amounted to Sh932 billion.

“Accordingly, balancimng the budget has been achieved by downsizing spending by Ministries, Departments and Agencies (MDAs). However, county allocations have never been affected by the shortfalls,” Mr Yatani argued in his proposal to Senate.

He said in 2017/2018 financial year, when ordinary revenue grew by four per cent against a target of 13 per cent, culminating in a Sh195 billion shortfall, counties’ allocation grew by eight per cent from Sh280.3 billion to Sh302 billion.

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