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Treasury cites heavy debt burden for not increasing kitty to counties in next year's budget

BUSINESS
By Dominic Omondi | Dec 10th 2021 | 2 min read
By Dominic Omondi | December 10th 2021
BUSINESS

The National Treasury Building. [File, Standard]

The government will not increase allocation to counties despite the recent growth in tax revenues by close to a third.

National Treasury Cabinet Secretary Ukur Yatani yesterday cited the need to stabilise the growth of the country’s debt as one of the reasons the equitable share to the 47 county governments will not be increased in the upcoming 2022-23 financial year.

“Chair, you need to understand that as much as revenue is growing, our expenditure also on another level has seriously grown. We are also paying more in terms of debt, and the cost of living is increasing,” he told the Senate Committee on Finance and Budget at Parliament buildings during a meeting to discuss the Budget Policy Statement for next year.

Committee chairman Charles Reubenson Kibiru had sought to know why counties were not sharing in the growth of revenues.

“When you talk about the 29 per cent growth (in revenue), we expect that part of that growth will be shared with the county governments,” said the Kirinyaga Senator.

Counties have been allocated Sh370 billion as part of the shareable revenue with the National Government in the financial year beginning July next year.

CS Yatani said most of the growth in revenue will be channelled to the three arms of the national government, particularly in security where there has been an increase in personnel.

Albert Mwenda, director-general, Budget, fiscal and economic affairs at the National Treasury, said the allocation for both levels of government, as a fraction of Gross Domestic Product (GDP), had been cut because of the need to stabilise the growth of debt.

“Because if we grow the allocations and the revenues do not grow, then what we are saying is that we are borrowing more, and we lose out on the opportunities to pursue our fiscal consolidation path,” said Mr Mwenda. 

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