Governors warn of cash crisis due to late disbursement

Kakamega Governor Wycliffe Oparanya. He has said a number of counties could resort to borrowing from banks following failure by the government to release money to devolved units. PHOTO | FILE | NATION MEDIA GROUP

What you need to know:

  • Council of Governors finance committee chairman Wycliffe Oparanya said a number of counties could resort to borrowing from banks following failure by the government to release money to devolved units.
  • On Monday, outgoing council chairman Peter Munya raised concerns about the collapse of the Integrated Financial Management system.
  • Mr Munya said the constant breakdown of Ifmis disrupted services.

Governors have warned of a financial crisis in counties due to late disbursement of funds and collapse of the electronic payment system.

Council of Governors finance committee chairman Wycliffe Oparanya on Tuesday said a number of counties could resort to borrowing from banks following failure by the government to release money to devolved units.

On Monday, outgoing council chairman Peter Munya raised concerns about the collapse of the Integrated Financial Management system.

According to Mr Oparanya, the delayed release of Sh74.7 billion earmarked for the fourth quarter of the financial year had made a number of counties opt for bank overdrafts.

WITHHOLD MONEY

“The National Treasury has no reason to delay or withhold counties’ money,” Mr Oparanya said.

“Treasury cannot offer any justification for constant delays in disbursement of funds. Several times, counties have been unable to meet their obligations on investment and employment.”

Mr Munya said the constant breakdown of Ifmis disrupted services.

IFMIS BROKE DOWN

“In Meru, we were unable to pay salaries on time because Ifmis broke down for two weeks. We could not even upload our supplementary budget into the system,” he said.

Treasury, however, defended itself saying the ministry gave priority to counties while releasing funds.

The decision by the counties to seek overdraft could open a Pandora’s box.

County governments are not allowed to seek bank loans without approval from Central Bank.