The government of Kenya is set to establish a Treasury Single Account (TSA) system in order to improve public cash management. Under the TSA, government funds will be centralized in a main account at the Central Bank of Kenya (CBK), with additional sub-accounts at commercial banks.
The National Treasury says this move is important as the government plans to maintain a balance between the Government expenditure and revenue earned. Secondly, the Treasury Single Account has been necessitated with the often cash strained government lacking access to cash held by its various institutions.
Last year, the National Treasury conducted an audit revealing that government entities held up to KES 431.7 billion in bank accounts. All these cash were available but not immediately accessible even as government struggled to find money.
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Having learnt from experience, the migration to the TSA system is deemed important and will start on 1st July 2024.
“The PFM Act, 2012 and its attendant Regulations provides for the establishment of the Treasury Single Account (TSA) system at both the National and County Governments. Based on the experience over the last 10 years since the enactment of the PFM Act, 2012, the need to review the scope of TSA implementation has become apparent,” said Prof. Njuguna Ndung’u, Cabinet Secretary for The National Treasury and Economic Planning. He was presenting the budget policy highlights and revenue raising measures for the financial year 2024/25 budget.
To fully utilize the Treasury Single Account system, further functionalities need to be implemented. The existing automation of government payments through IFMIS and the CBK’s Internet Banking (IB) system will provide a valuable foundation for expanding the TSA’s reach. Prof Ndung’u states that this will lead to a more efficient financial management system.
Other than ensuring fiscal discipline, treasury envisions migration to the system will bring transparency, and efficiency in the management of public finances. To achieve this, the National Treasury will set up a team to oversee the TSA and its sub-accounts.