The Senate has given Meru County major relief after rejecting the National Treasury’s decision to stop the transfer of funds to the county government.

Lawmakers on Tuesday, May 12, 2026, adopted the Report of the Standing Committee on Finance and Budget and voted to overturn the directive. The motion passed with 26 votes in favour, none against and three abstentions.

The Senate resolved:

“THAT, the Senate adopts the Report of the Standing Committee on Finance and Budget on the stoppage of transfer of funds to the County Government of Meru laid on the Table of the Senate on Tuesday, 12th May, 2026 and pursuant to Article 225 (5) of the Constitution and section 97 (4) of the Public Finance Management Act, the Senate rejects the decision by the Cabinet Secretary for the National Treasury and Economic Planning to stop the transfer of funds to the County Government of Meru.”

The decision cancels a Treasury order that had blocked 50 per cent of Meru County’s allocations. The National Treasury said it acted after the county failed to settle a long-standing arbitral award owed to a French investor.

Debt triggers financial crisis

The debt dates back to 2018 when Meru County evicted French investor Michel Dechauffour, operating through Leopard Rock Mico Limited, from a lease in Meru National Park. The High Court later awarded the investor Ksh339 million in compensation in December 2019, with interest set at 14 per cent per year.

The amount has since grown sharply, with Senate committees estimating the total at nearly Ksh700 million due to accumulated interest and legal costs.

Treasury Cabinet Secretary John Mbadi told senators that the government had no option but to act. He said the unpaid debt exposed the country to financial and diplomatic risks.

“The continued non-settlement of the arbitral award is detrimental to the fiscal sustainability of the County Government and foreign relations between Kenya and France,” Mbadi said.

He added that France had raised the matter at diplomatic level and warned that continued delay could escalate the dispute.

The Senate Standing Committee on Finance and Budget, chaired by Mandera Senator Ali Roba, opened an inquiry into the freeze and summoned officials from the National Treasury, the Controller of Budget, the Auditor-General, and Meru County officials.

“We must proceed by first inviting the National Treasury, the County Government of Meru, the Controller of Budget, and the Auditor General,” Senator Ali Roba said.

Roba said counties needed stable funding to deliver services and meet growing responsibilities under devolution.

The committee held hearings in which Meru Governor Isaac Mutuma appeared alongside Treasury officials and the Controller of Budget.

During the hearings, Treasury officials defended the freeze as a legal step under Article 225 of the Constitution. They said the county had failed to meet repayment obligations despite repeated engagement.

Senate blocks treasury sanctions

The Controller of Budget also flagged the matter, warning that continued failure to settle the debt could trigger financial sanctions under the Public Finance Management Act.

But senators rejected the move, arguing that it would harm ordinary residents.

Senators warned that the freeze would have disrupted essential services in Meru County, including health care, road maintenance, water supply and payment of salaries.

Lawmakers also questioned why other counties with pending bills had not faced similar action. They described the decision as inconsistent and risky for devolution.

They further raised concerns about reports that the national government was exploring ways to assist Meru County in settling part of the debt.

The Senate invoked Article 225(5) of the Constitution and Section 97(4) of the Public Finance Management Act to overturn the Treasury directive. The law allows Parliament to reject or approve financial intervention measures affecting counties.

The ruling forces the Treasury to resume full transfers to Meru County without delay.

During the same Senate sitting, lawmakers also approved the Equalisation Fund Appropriation Bill, 2025, unlocking Ksh16.8 billion for basic services in 34 counties. The Bill, which supports water, health, roads and electricity projects in marginalised areas, passed after the Standing Committee on Finance and Budget recommended approval without amendments.