FISCAL RESPONSIBILITIES OF THE NATIONAL TREASURY 1

THE FISCAL RESPONSIBILITIES OF THE NATIONAL TREASURY

The national treasury as established by section 11, Article 225 of the constitution has been

mandated with a number of responsibilities to ensure the smooth functioning and running of

other governmental entities. According to the Public management Act, article 16 and 17 The

National Treasury is headed by the Cabinet Secretary, who ensures that the fiscal responsibilities

overtaken by the national treasury are properly carried out. According to The National Treasury

(2018) responsibilities include management of national public funds, undertaking the budget

process among other responsibilities discussed in this paper.

1. Responsibilities of the National Treasury with respect to National Public Funds.

i. The National Treasury has been mandated to administer the Consolidated Fund, in

accordance to article 206 of the constitution. The fund is kept in an account to be

known as the National Exchequer Account, maintained in the Central Bank of Kenya

and shall make certain that the National Exchequer Account is not overdrawn at any

time.

ii. The National Treasury is to administer the Equalisation Fund, as stipulated by Article

204 of the Constitution and shall keep the Equalisation Fund in a separate account

maintained at the Central Bank of Kenya. The national treasury is expected to transfer

into that Equalisation Fund all revenues payable into the Fund under Article 204(1) of

the Constitution. The national treasury should also ensure that the Equalisation Fund

Account is not overdrawn at any time.

iii. Be a source of the Contingencies Fund, Consisting of monies appropriated from the

Consolidated Fund by an appropriation Act in any financial year, as established by

Article 208 (1) of the Constitution and also ensure all monies appropriated to the
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Contingencies Fund by an appropriation Act are paid without undue delay, depending

upon the set criteria and the process and operational guidelines.

iv. In respect of the Contingencies Fund that year, the national treasury has been

mandated to prepare and submit to the Auditor-General, financial statements, not later

than three months after the end of each financial year. The financial statements should

indicate the date and amount of each payment made from the Contingencies Fund; the

particular individual to whom the payment was made; the purpose for which the

payment was made; if the individual to whom the payment was given has already

spent the money for that sole purpose, and a statement to that effect, if the individual

to whom the payment was made has not yet made use of the money for the sole

purpose of which it was meant for and a statement specifying the reasons for not

having done so.

2. Responsibilities of the National Treasury with respect to the budget Process.

i. The National Treasury is expected to prepare an annual Budget Policy Statement

approved in terms of subsection (1) of the constitution, to Parliament, by the 15th

February in each year. The Budget Policy Statement is expected to contain the broad

policy goals and strategic priorities that will guide both the national and county

governments in formulating their budgets for both the following financial year and

over the medium term.

In preparing an annual budget policy statement, an assessment of the current state of the

economy and the financial outlook over the medium term is required. Also very important is the

financial outlook with respect to Government expenditures, revenues and borrowing for the

subsequent financial year and over the medium term; The annual budget policy statement should
FISCAL RESPONSIBILITIES OF THE NATIONAL TREASURY 3

include the proposed expenditure limits for the national government, including those of

Parliament and the Judiciary and suggestive transfers to county governments; as well as the

monetary responsibility principles and financial objectives over the medium term including

limits on total annual debt.

ii. National Treasury is expected to prepare a Budget Review and Outlook Paper, to the

cabinet for approval by the 30th September in each financial year.

The Budget Review and Outlook Paper is supposed to include an actual fiscal performance in the

previous financial year likened to the budget appropriation for that financial year; It should also

contain an updated macro-economic and fiscal forecasts with adequate data to show changes

from the forecasts in the most recent Budget Policy Statement. Also very crucial is information

on how actual financial performance for the preceding financial year may have affected

compliance with the fiscal responsibility principles or the financial objectives in the latest

Budget Policy Statement.

iii. The national treasury is expected to undertake Publication of pre- and post-election

economic and fiscal reports by National Treasury. a pre-election economic and fiscal

update is to be done not earlier than four months before the voting day for any general

election, while a post-election economic and fiscal update is to be published not later

than four months after the voting day of any general election.

3. Other Responsibilities of the National Treasury.

i. The National Treasury is supposed to undertake banking arrangements for other

national government entities. It can authorize the opening, operation and closure of

bank accounts and sub accounts for all national government entities in accordance

with regulations made under this Act

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ii. The national treasury is expected to manage cash at the national government level, by

ensuring that each and every national government entity, other than a state

corporation, submits an annual cash plan and forecast in a manner relating to periods

directed by the Treasury. The National Treasury shall also establish a framework

within which the national government shall manage its cash transactions.

iii. The National Treasury is required to submit to Parliament, additional reports upon

requirement. And a submission of national government debt management strategy

annually and also partake in the Budget Formulation process.

iv. At the end of each financial year, the National Treasury is expected to prepare and

make available for the national government, clear and comprehensible annual

financial statements that consolidate the financial statements prepared by all national

government entities, in accordance with formats prescribed by the Accounting

Standards Board (The National Treasury 2018).

The financial statements should include, a statement of all monies paid into and out of the

National Exchequer Account; a summary of:

(a) A statement highlighting the total amount of debt carried by the national government and

is outstanding at the end of the fiscal year.

(b) The appropriation accounts and statements organized by accounting officers as stipulated

by section 81.

(c) The statements prepared by receivers of revenue as stipulated by section 82.

(d) A statement highlighting payments made out of the National Exchequer Account and are

authorized by any other legislation other than an Appropriation Act.

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(e) A statement highlighting any waivers ( if any) under Article 210 of the constitution

contained in the submission of the financial statements and summaries to the Auditor-

General and a copy to the Controller of Budget and the Commission on Revenue

Allocation as referred to in subsection (1).

(f) The National Treasury is expected to publish and publicize the statements above to the

public so as to maintain and promote transparency.

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References

The National Treasury (2018). Executive Summary. Accessed on 16 January 2018, from

http://www.treasury.go.ke/aboutus/executive-summary.html

THE PUBLIC FINANCE MANAGEMENT ACT, 2012 Retrieved 16 January 2018, from

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&cad=rja&uact=8&ve

d=0ahUKEwjf75bLmNvYAhUFvhQKHRHtB3oQFghJMAY&url=http%3A%2F%2Fwww.treas

ury.go.ke%2Ftax%2Facts.html%3Fdownload%3D603%3Athe-public-finance-management-act-

2012-1-1&usg=AOvVaw1L-brYdIamXwDQE7dUN1T0