NAIROBI, Kenya Aug 22 – The Cabinet Committee on the Implementation of the Constitution on Monday failed to resolve a stalemate on two pieces of legislations on Public Finance which the Constitution requires to be implemented within a year.
The two draft Bills are on Contingencies Fund and that for loan guarantees by the national government.
The daylong meeting chaired by Prime Minister Raila Odinga, instead resolved to meet again on Monday evening and to iron out the outstanding issues between the Treasury and the Ministry of Local Government over the Public Finance Management Bill. A statement form the Prime Minister Office said the committee needed to focus on the two Bills whose implementation is urgent.
The Prime Minister noted that the Constitution actually gave four years for the enactment of the six laws on Public Finance.
However, a Bill to implement the Contingencies Fund and that for loan guarantees by national government needed to be done within one year of the promulgation of the Constitution.
The Bill will radically create a powerful new law on management of public funds including the entire budgeting process, sections of public procurement and the nation’s economic policy setting.
The Public Funds Management Bill will swallow several other existing laws touching on public finances that will have to be repealed and is to be law by August 27 this year. The law will for example dictate how the first budget adhering to the new Constitution will be prepared and submitted.
Laws that will be repealed if the Bill becomes law include: the Fiscal Management Act, Government Finances Management Act (2009), Internal Loans Act, External Loans and Credit Act, Guarantee (Loans) Act and the PS to the Treasury Act.
Among the chapters in the draft are: macro-fiscal policy, budgeting, Treasury management, accounting audit, special provisions, sanctions/transition.
This is the law which will also govern how resources will be shared between the national government and the county governments under the envisaged devolution of powers model in the new Constitution.
For example it is expected to determine the exact revenues that will be shared as there is still debate as to whether it is the revenue collected by the Kenya Revenue Authority or even revenues earned by parastatals and Appropriations in Aid such as fees collected at hospitals.
The decision was taken after the Chairman of the Constitution Implementation Commission Charles Nyachae said that if the Cabinet adopted a draft without participation of the CIC, and presented it to Parliament, it would constitute breach of the constitutional requirements.
The Chairman of the Commission on Revenue Allocations Micah Cheserem equally stated that the Constitution requires consultation with the CRA before the Bill was presented to Parliament. He said that the CRA had not seen the draft, and therefore he was not in a position to comment on it.
The Committee agreed to go over the two urgent drafts and formally transmit them to the CIC and the CRA through the Office of the Attorney-General.
The Committee expects to receive comments from the CIC and the CRA before submitting the draft to the Cabinet on Tuesday.
Deputy Prime Minister and Local Government Minister Musalia Mudavadi said he wanted to be satisfied that the distinctiveness between the County and Central Governments is taken into account in the Public Finance Bill, in line with the constitution.
On CIC’s proposal that the Cabinet seeks an extension of the deadline for adoption of the Public Financial Management Act, the committee said that even if the extension was sought, there was no guarantee that Parliament would grant it.
Ministers said the proposal would require a two-thirds majority to sail through Parliament.
The meeting was attended by Deputy Prime Minister and Finance Minister Uhuru Kenyatta, cabinet ministers Otieno Kajwang, Amos Kimunya, James Orengo, Kiraitu Murungi, Mutula Kilonzo and Dalmas Otieno.
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