Govt to Roll Out Treasury Single Account to Counties from July

The government will expand the implementation of the Treasury Single Account (TSA) to county governments from July 1, 2026, in a move aimed at streamlining county requisition and payment processes while enhancing transparency and accountability in public financial management.

Treasury Cabinet Secretary John Mbadi announced the reforms while presenting the 2026/27 Budget Statement in Parliament, saying the government remains committed to strengthening devolution through timely and efficient fiscal transfers to counties.

Mbadi said county governments are projected to receive a total allocation of Sh502 billion in the 2026/27 financial year.

The allocation comprises Sh428 billion as the equitable share of revenue, Sh16.6 billion in additional allocations from the National Government’s share of revenue, and Sh57.4 billion in loans and grants from development partners.

“The government remains committed to supporting devolution through intergovernmental fiscal transfers in line with Article 202 of the Constitution,” Mbadi told lawmakers.

He proposed an equitable share allocation of Sh428 billion to be transferred to county governments based on the Fourth Basis for revenue sharing.

According to the Treasury CS, the allocation represents 21 per cent of the most recently audited national revenue for the 2022/23 financial year, surpassing the constitutional minimum threshold of 15 per cent provided under Article 203(2) of the Constitution.

“Including the additional allocation from the National Government’s share of revenue of Sh16.6 billion to the proposed equitable share of Sh428 billion implies that county governments will receive a total of Sh444.6 billion in FY 2026/27,” he said.

“Further to this allocation, I have proposed an additional allocation of Sh57.4 billion from loans and grants from development partners.”

To improve the flow of funds to counties, the National Treasury has prepared the draft Public Finance Management (Amendment) Bill, 2025, which seeks to amend Sections 42 and 191 of the Public Finance Management Act.

Mbadi said the proposed amendments will provide for the submission of two separate pieces of legislation: one covering county governments’ additional allocations and the National Government’s share of revenue, and another dealing with proceeds from development partner loans and grants.

The Treasury believes the changes will help reduce delays in the approval and disbursement of additional allocations to county governments.

The government has also proposed an additional Sh10.3 billion for the Equalisation Fund in the 2026/27 financial year to support development projects in marginalised areas.

At the same time, Mbadi raised concern over the growing stock of pending bills owed by county governments, warning that the liabilities continue to pose a significant fiscal risk.

He revealed that county governments had accumulated pending bills amounting to Sh183 billion as of June 30, 2025.

To address the challenge, the Cabinet Secretary said the Intergovernmental Budget and Economic Council (IBEC), during its 27th Ordinary Session, approved and adopted a County Governments’ Pending Bills Action Plan prepared by the Controller of Budget.