Treasury Cabinet Secretary John Mbadi says the total allocation to county governments is projected at Sh502.0 billion.
The amount includes Sh428.0 billion in equitable share and Sh74.0 billion in additional allocations from the National Government’s share of revenue and loans (Sh16.6 billion) and grants from development partners (Sh57.4 billion).
The National Treasury has also developed the draft Public Finance Management (Amendment) Bill, 2025, which proposes to amend Sections 42 and 191 of the Public Finance Management Act, Cap 412A, he said.
These amendments, according to the CS, aim to provide for the submission of two separate Bills: one on county governments’ additional allocations and the National Government’s share of revenue Bill, and another on proceeds from loans and grants from development partners.
This, he said, will mitigate delays in the approval and disbursement of county government additional allocations.
Mbadi said during this year’s budget speech that the government remains committed to supporting devolution through intergovernmental fiscal transfers in line with Article 202 of the Constitution.
“I therefore, propose to allocate Sh428.0 billion in equitable share which shall be transferred to the respective county governments as per the Fourth Basis formula during FY 2026/27,” he said.
The Treasury boss told MPs that the Sh428.0 billion represents 21 per cent of the most recently audited revenues for FY 2022/23, higher than the minimum of 15 per cent prescribed in Article 203(2) of the Constitution.
“Mr. Speaker, including the additional allocation from the National Government’s share of revenue of Sh16.6 billion to the proposed shareable of Sh428.0 billion implies that county governments will receive a total of Sh444.6 billion in FY 2026/27.”
“Further to this allocation, I have proposed an additional allocation of Sh57.4 billion from loans and grants from development partners.”
To support implementation of projects in marginalised areas, the CS said an additional Sh10.3 billion has been proposed for the Equalization Fund in FY 2026/27.
Mbadi told the country that the growing stock of pending bills in county governments poses a fiscal risk, revealing that as of 30 June 2025, counties had outstanding pending bills amounting to Sh183.0 billion.
During its 27th Ordinary Session, the CS said the Intergovernmental Budget and Economic Council (IBEC) approved and adopted the County Governments’ Pending Bills Action Plan submitted by the Controller of Budget.
“The Council directed all county governments to customise and implement their respective pending bills action plans to progressively reduce the stock of pending bills. I urge county governments to ensure full implementation of the agreed action plans,” Mbadi said.
