Treasury wants to split county funding bills because delays are costing Kenya millions in fees. The Draft Budget Policy Statement 2026 lays out plans to change the Public Finance Management Act and submit two separate laws for extra county cash. One bill handles money from national revenue, and the other covers loans and grants from development partners.
The change targets a recurring mess that wrecks service delivery and jacks up foreign borrowing costs. Holdup problems mean counties get their funding deep into the fiscal year, which kills project rollouts and tanks budget absorption. Commitment fees and interest on foreign loans pile up when disbursements drag.
The County Governments Additional Allocations Bill keeps getting stuck in approval limbo. Right now, everything gets crammed into one bill that Parliament must green-light before any cash moves, whether it's domestic revenue or donor money. Treasury says this setup traps development partner financing in local political gridlock that has nothing to do with the actual donor programs.
The Intergovernmental Budget and Economic Council told Treasury to launch multi-stakeholder talks within a month to find better legislative and administrative frameworks. Treasury already drafted the Public Finance Management Amendment Bill 2025, which tweaks Sections 42 and 191 of the PFM Act. The amendments let them file two separate bills to Parliament and fence off donor-financed allocations.
Splitting the bills should speed up approval and hit disbursement deadlines for development partners who operate under tight contractual timelines. The Attorney General's office reviewed the proposal, the Cabinet signed off, and it's headed to Parliament. Low absorption of conditional grants keeps flagging oversight bodies as projects stall or get pushed to later years.
The change targets a recurring mess that wrecks service delivery and jacks up foreign borrowing costs. Holdup problems mean counties get their funding deep into the fiscal year, which kills project rollouts and tanks budget absorption. Commitment fees and interest on foreign loans pile up when disbursements drag.
The County Governments Additional Allocations Bill keeps getting stuck in approval limbo. Right now, everything gets crammed into one bill that Parliament must green-light before any cash moves, whether it's domestic revenue or donor money. Treasury says this setup traps development partner financing in local political gridlock that has nothing to do with the actual donor programs.
The Intergovernmental Budget and Economic Council told Treasury to launch multi-stakeholder talks within a month to find better legislative and administrative frameworks. Treasury already drafted the Public Finance Management Amendment Bill 2025, which tweaks Sections 42 and 191 of the PFM Act. The amendments let them file two separate bills to Parliament and fence off donor-financed allocations.
Splitting the bills should speed up approval and hit disbursement deadlines for development partners who operate under tight contractual timelines. The Attorney General's office reviewed the proposal, the Cabinet signed off, and it's headed to Parliament. Low absorption of conditional grants keeps flagging oversight bodies as projects stall or get pushed to later years.
