The government is exploring a new strategy that will see all Ministries, Departments and Agencies (MDAs) bank accounts integrated into a single Treasury account.
Titled the 2023 Medium Term Debt Management Strategy, the government explained that the move was one of the ways to reduce domestic borrowing, as explained in the Final Supplementary Order Paper tabled to Parliament on Wednesday, March 15,
Instead of the government turning to the local market for borrowing, it will seek financing from various government entities first.
“To enhance liquidity management and help reduce unnecessary short-term domestic borrowing occasioned by governments inability to access surplus funds held in numerous MDAs bank accounts, the National Treasury will spearhead the integration of MDA banking arrangements into a single Treasury account system,” the Order Paper stated.
The system should be tabled to Parliament within six months by the Treasury according to the Order Paper.
The integration of individual government entity bank accounts into a single Treasury account is provided in Public Finance Management (PFM) Act, 2012 Section 28.
Under the Act, the National Treasury is authorised to open, operate and close bank accounts and sub-accounts for all national government entities.
“The National Treasury shall establish a Treasury Single Account into which all revenues received by national government entities shall be deposited and from which all payments of money to or on behalf of national government entities shall be made,” the Act reads in part.
The Act protects funds for various MDAs by stating that shall not be operated in any manner that prejudices any entity to which funds have been disbursed.
To enhance accountability, the Act orders, “An accounting officer for a national government entity shall not cause a bank account of the entity to be overdrawn beyond the limit authorised by the National Treasury or a board of a national government entity.”
In case that is not followed, the accounting officer who breaks the law is liable for the full cost of the overdrawn amount, in addition to any other disciplinary measures.
Speaking to Kenyans.co.ke financial expert Nicholas Mutua revealed what a single treasury account means.
"Ideally, MDAs bank their money at the Central Bank of Kenya (CBK) and under the new directive, it means they will all operate using one account," he explained.
The harmonisation of MDAs bank accounts comes against the backdrop of the government harmonising payments to different entities through the e-citizen platform.
On Thursday, March 16, Cooperatives and SMEs Cabinet Secretary Simon Chelugui revealed that the government was collecting over Ksh100 million every day after the digitisation of services on the eCitizen platform.
He added that 5,318 government services can be accessed via mobile phones with the government targeting a doubling of the figure by mid-2023.
