County public finance management is an emerging issue as identified in the 2023 Budget Policy Statement. The National Treasury in the financial year 2022/2023 through a Multi-Agency Taskforce identified challenges faced by County Governments in the management of public finance and proposed several measures for intervention going forward.
The Public Financial Management programme under the National Treasury, aims to promote transparent and accountable management of public resources, and it is this programme that should address the issues raised by the taskforce. For example, this programme closely supports public finance management improvements in county governments, and fosters the devolved system of governance. Despite this, the programme budget was cut, which may undermine these goals this and the budget cuts should be reversed.
According to the Taskforce, there is evidence showing that there is a technical capacity gap amongst county government officials on PFM related areas that limits their efficiency in the execution of public financial management decisions and thus, the government should prioritize this programme. Continuous capacity strengthening of county governments officials on PFM related areas is recognized as an important measure to address some of the challenges and one of the Taskforce’s recommendations towards improving public finance management in county governments.
Budget cuts to the programme have previously affected the realization of some of the planned targets. For example, the Sector Working Group report on performance for Medium Term Expenditure Framework period 2019/20-2021/22 shows that some programme targets were not met due to budget cuts. Notably, under the Public Financial Management Reforms sub-programme, the National Treasury targeted to enhance skills and capacity of 7,500 officers in Public Finance Management through training but only trained 7,000, which is attributed to budget cuts. Furthermore, the cut in the FY 2023/24 is very likely to affect the National Treasury’s commitments for this year.
The Public Financial Management programme has been a well-performing programme against others, raising questions as to why it was targeted for budget cuts and without justifications. In addition, it posted a relatively high budget absorption rate of 86.5 per cent in FY 2021/2022. Contrastingly, one of the programmes by the name Government Clearing Services for example, whose absorption was the least of all the programmes under the National Treasury at 71.3 per cent, has the least budget cut. However, no justifications are provided as to why this is the case.
The programme plays a critical role in supporting public finance management improvements in county governments by promoting transparent and accountable management of public resources and should thus be prioritized. The budget cut to the programme this year is very likely to affect the National Treasury’s commitments and targets and should therefore be reversed.
2023 Budget Policy Statement.
2022 Budget Review and Outlook Paper.
Author: Victoria Wausi, Programmes Officer, Institute of Public Finance
Institute of Public Finance