NAIROBI, Kenya, Sep 28 – The Central Bank of Kenya (CBK) says County Governments can only borrow five percent of their revenue to plug any shortfall they may have.
During an Intergovernmental Budget and Economic Council meeting, CBK Governor Patrick Njoroge indicated that the monies should be paid within a year.
Njoroge said that Central Bank would provide overdrafts of five percent maximum of gross recurrent revenues to the County governments.
“I want to make it clear that Central Bank will only allow Counties to borrow up to five percent of their revenues and nothing more than that,” he said.
He further pointed out that the Government was coming up with guidelines to make it legal for the counties to borrow the funds.
The meeting which was chaired by Deputy President William Ruto also agreed that a new pension scheme will be established for county governments away from those that served defunct authorities.
Present at the meeting were Treasury Cabinet Secretary Henry Rotich, Cleophas Mailu (Health), chairman of the Council of Governors Peter Munya, Governors Isaac Ruto (Bomet), Wycliffe Oparanya (Kakamega), William Kabogo (Kiambu), Sospeter Ojaamong (Busia), Kivutha Kibwana (Makueni), Moses Lenolkulal (Samburu) and Alex Tolgos (Elgeyo Marakwet) among others.
The Deputy President said IBEC has approved mechanisms for County governments to access overdrafts at CBK with guarantee from the National Treasury.