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The National Treasury is facing an uphill task in raising Sh407 billion as an equitable share for counties in the next Financial Year.

Although the National Treasury has allocated Sh385 billion for the devolved units, senators want it to add some Sh22 billion to make it Sh407 billion for counties to function optimally in the next fiscal year.

Treasury has insisted on disbursing Sh370 billion as equitable share, an amount governors say is too little given the rising cost of living.

Yesterday, National Treasury Cabinet Secretary Prof Njuguna Ndung’u (pictured) had a hard time convincing senators why his ministry cannot allocate Sh407 billion for the devolved units.

 “The proposed allocation of Sh385 billion by the National Treasury will not be sufficient to accommodate all the components,” said Ali Roba, who chairs the Senate’s Finance and Budget Committee.

According to Ndung’u, Treasury is caught between shrinking revenues and narrowing borrowing headroom, a situation that has affected several Government programmes, including disbursement to counties. “We are caught up between two extremes; high level of debt financing and financing constraints due to limited access to finance in domestic and international financial market,” Prof Ndung’u said.

The CS appeared before the Senate committee to discuss the proposed allocations to counties as captured in Division of Revenue Bill, 2023. The Division of Revenue Bill shows how much both the National and county governments revenues raised nationally are supposed to be shared between the two levels of governments.

Already, the proposed law has been passed by the National Assembly and has been taken to Senate for concurrence. In the Bill, counties have been allocated Sh385 billion with the National government getting a whopping Sh2.17 trillion and Sh8.36 billion going to marginalised counties as equalisation fund.

Proposed allocation to counties, according to the Treasury, represents 24.5 per cent of the last audited and approved accounts of Sh1.57 trillion for the 2019-20 financial year. However, the Senators faulted the Treasury’s calculations and logic behind the proposed allocation of Sh385 billion.

Committee argued that Treasury classified some conditional grants – which should be treated differently and not as part of the equitable.

This move, the Senators, argued only disadvantaged the counties.