|National Treasury Cabinet secretary Henry Rotich has a word with Higher education loans board CEO Charles Mutuma during a meeting on Euro bond issuance process at Enashipai Resort in Naivasha.|
The Ministry of Finance has ruled out increasing funds to counties to the levels demanded by governors in their referendum campaigns.
This comes at a time when the Government and county chiefs are in talks to arrive at a compromise in a debate that has elicited mixed reactions countrywide.
Finance Cabinet Secretary Henry Rotich noted that allocating more cash to the devolved units would have negative implications on the recovering economy.
"If we do not match the resources with the functions according to our budget, we will have a financial crisis," warned Mr Rotich.
He was addressing the Press at a Naivasha hotel during a workshop on the Eurobond issuing process, challenges and benefits.
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He said the move would lead to increased taxation or more borrowing to sustain the demands.
"If we were to increase funds to counties as demanded, it would mean increasing taxes and the Government is not ready to do that," he said.
Rotich said the Treasury had costed various functions for the national and county governments and allocated cash accordingly.
"We have already allocated over 15 per cent of the funds to county governments. Funds should go to where the functions are," he said.
While admitting that the Government was open to dialogue, the CS called on governors to tone down their demands.
He said the State was ready to increase funding to counties if revenue collection increased.
"We also have a duty to pay workers' salaries in Parliament, the Judiciary and other offices," he said.
He said the current high political temperatures had not eroded investor confidence and the bond's performance in the market was impressive three months after it was released.
CFC Stanbic Bank Chief Executive Officer Greg Brackenridge praised the process of issuing the Eurobond, adding that investors were keen to work with the State.
"The meeting is meant to understand the process and borrowing rates for the bond and various investors have shown interest," he said