Loans threaten counties, budget expert warns

Counties would run into huge debt if allowed to continue borrowing loans without the approval of the relevant authorities, a budget and policy expert has warned.

Speaking to journalists on Wednesday during a sensitisation forum on budgeting in Nakuru, Jason Lakin, who works with International Budget Partnership (IBP), said debt is a financial burden to the devolved units and can be controlled by the county assembly.

“The result of the counties failing to observe the existing laws in securing loans is piling up debts," he said.

Lakin says the National Treasury and the county assembly are the two entities under the Public Finance Management Act permitted to approve any loan sourced by the county government.

“The county assembly’s oversight role over the executive cannot be assumed. And its independence in matters of budgeting and financial operations cannot be overruled either,” he added.

He cited a claim that the Kisumu County had incurred a Sh13,032,474 million loan from a local bank to finance the transport and accommodation expenses for MCAs trip to Uganda, Europe and Nairobi without the approval of the respective entities. 

An audit report for the county government of Nakuru is yet to publicised as it has not yet been tabled in the Senate and the  county assembly to become a public document. It is expected to shed light on the status of financial management in the county.

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