207. Public participation 208. Repeal of certain Acts 209. Consequential amendments to other Acts 210. Savings and transitional provisions SCHEDULES CONSEQUENTIAL AMENDMENTS TO OTHER ACTS SAVINGS AND TRANSITIONAL PROVISIONS 10 [Rev. 2020] Public Finance Management No. 18 of 2012 NO. 18 OF 2012 PUBLIC FINANCE MANAGEMENT ACT [Date of assent: 24th July, 2012.] [Date of commencement: 27th August, 2012.] An Act of Parliament to provide for the effective management of public finances by the national and county governments; the oversight responsibility of Parliament and county assemblies; the different responsibilities of government entities and other bodies, and for connected purposes [Act No. 18 of 2012, Act No. 34 of 2013, Act No. 6 of 2014, Act No. 16 of 2014, Act No. 38 of 2016, Act No. 15 of 2017, Act No. 18 of 2018, Act No. 12 of 2019, Act No. 1 of 2020, Act No. 13 of 2020, Act No. 16 of 2020.]

PART I – PRELIMINARY 1. Short title and commencement (1) This Act shall be cited as the Public Finance Management Act, 2012.

(2) Subject to Article 116(3) of the Constitution, all provisions relating to county governments under this Act shall come into operation upon the final announcement of the results of the first elections under the Constitution.

2. Interpretation (1) In this Act, unless the context otherwise requires— “accounting officer” means— (a) an accounting officer of a national government entity referred to in section 67; (b) an accounting officer of a county government entity referred to in

section 148; (c) in the case of the Judiciary, the Chief Registrar of the Judiciary; or (d) in the case of the Parliamentary Service Commission — (i) the Clerk of the Senate in respect of the Senate; (ii) the Clerk of the National Assembly in respect of the National Assembly; and (iii) such other officer in the parliamentary service in respect of any other office in the parliamentary service as the Cabinet Secretary shall, upon resolution by the Commission, designate, within fourteen days of the resolution; “Accounting Standards Board” means the Public Sector Accounting Standards Board established under section 192; “appropriation” means— (a) authority granted by Parliament to pay money out of the Consolidated Fund or out of any other public fund; or (b) authority granted by a county assembly to pay money out of the relevant County Revenue Fund or out of any other county public fund; 11 No. 18 of 2012 Public Finance Management [Rev. 2020] “appropriation Act” means an Act of Parliament or of a county assembly that provides for the provision of money to pay for the supply of services; “authorised officer”— (a) in relation to the National Treasury, means any of its members or officers authorised by the National Treasury in accordance with

section 13; or (b) in relation to a County Treasury, means any of its officers authorised by the County Treasury in accordance with section 105; “borrower” means a person to whom a loan has been or is to be made; “Budget Policy Statement”, in relation to a financial year, means the Budget Policy Statement referred to in section 25; “Cabinet Secretary” means the Cabinet Secretary responsible for matters relating to finance; “chart of account” means a structured list of accounts used to classify and record budget revenue and expenditure transactions as well as government assets and liabilities on a standard budget classifications system; “Chief Officer” means the person appointed by the County Governor to administer the County department responsible for financial affairs; “collector of revenue”— (a) in relation to the national government, means a person authorised under section 76 to be a collector of revenue for the national government; (b) in relation to a county government, means a person authorised under section 158 to be a collector of revenue for that county government; “commitment” means entering into a contract or other binding arrangement under which expenses or liabilities may be incurred; “Contingencies Fund” means the Contingencies Fund established by

Article 208(1) of the Constitution; “county corporation” means a public corporation within a county established by an Act of Parliament or county legislation; “County Emergency Fund” means a Fund established under section 110; “County Exchequer Account” means a County Exchequer Account referred to in section 109; “County Executive Committee member for finance” means the member of a County Executive Committee responsible for the financial affairs of the County and for the County Treasury; “County Fiscal Strategy Paper”, in relation to a county government, means the County Fiscal Strategy Paper referred to in section 117; “county government entity” means any department or agency of a county government, and any authority, body or other entity declared to be a county government entity under section 5(1); 12 [Rev. 2020] Public Finance Management No. 18 of 2012 “county government revenue” means all money derived by or on behalf of a county government from levies, rates, fees, charges or any other source authorised by the Constitution or an Act of Parliament; “county government security” means a security issued by the county government under section 144 and includes a treasury bill, treasury bond, treasury note, government stock and any other debt instrument issued by the county government; “County Public Debt” means all financial obligations attendant to loans raised and securities issued by the county government; “County Treasury” means a County Treasury established under section 103; “development expenditure” means the expenditure for the creation or renewal of assets; “development partner” means a foreign government, an international organisation of states or any other organisation prescribed by regulations for the purpose of this Act; “external government security” means a national government security which is issued outside Kenya; “external loan” means any loan governed by the laws of a jurisdiction other than Kenya; “financial objectives” means the financial objectives set out in a Budget Policy Statement of the national government or in the County Fiscal Strategy Paper of the county governments; “financial statements”, in relation to a financial year or other accounting period of the national government, county government, or a national government or county government entity, means— (a) the financial statements referred to in Part III and Part IV of this

Act; and (b) the financial statements prescribed by the Accounting Standards Board; “fiscal responsibility principles” means the principles of public finance specified in Article 201 of the Constitution, together with— (a) the principles of fiscal responsibility referred to in section 15, in relation to national government; and (b) the principles of fiscal responsibility referred to in section 107, in relation to a county government; “Government to government loan” means any loan that is negotiated with or covered by any government or national government entity including any government Export Credit Agency (ECA) or investment insurance agency or financial institution that acts as an intermediary between the Government and exporters to facilitate export financing, whether by means of buyer or supplier credit, credit insurance, financial intermediary loans, guarantees, Organization for Economic Cooperation and Development (OECD) tied-aid credit or officially supported export credit depending on the mandate granted to such export credit agency by the relevant government for the purpose of facilitating trade and investment between the two countries; 13 No. 18 of 2012 Public Finance Management [Rev. 2020] “Intergovernmental Budget and Economic Council” means the Council established under section 187; “internal auditing” means an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations, which helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes; “Islamic finance return” has the same meaning assigned to it under

section 2 of the Income Tax Act; “loan” means any borrowing with or without interest from any source or any issuance of a national government security; "medium enterprise" means a firm, trade, service, industry or business activity- (a) whose annual turnover is between five million shillings and one hundred million shillings; (b) which employs between fifty one and two hundred and fifty employees; (c) whose total assets and financial investment shall be as determined by the Cabinet Secretary from time to time and includes— (i) the manufacturing sector, where the investment in plant and machinery or the registered capital of the enterprise does not exceed two hundred and fifty million shillings; and (ii) the service sector and farming enterprises, where the investment in equipment or registered capital of the enterprise does not exceed one hundred and twenty-five million shillings; “medium term” means a period of not less than three years but not more than five years; "micro enterprise" has the meaning assigned to it in section 2 of the Micro and Small Enterprises Act, No. 55 of 2012; “National Exchequer Account” means the National Exchequer Account referred to in section 17; “national government entity” includes any department or agency of the national government and any authority, body or other entity declared to be a national government entity under section 4(1); “national government revenue” means all taxes imposed by the national government under Articles 206(1)(a) and (b) and 209 of the Constitution, excluding county government revenue; “national government security” means a security issued by the national government under section 53 or section 53A and a treasury bill, treasury bond, Sukuk, treasury note, government stock and any other debt instrument issued by the national government; “National Treasury” means the National Treasury established by section 11; 14 [Rev. 2020] Public Finance Management No. 18 of 2012 “Principal Secretary”, in relation to the National Treasury, means the person responsible for the administration of the National Treasury; “public money” includes— (a) all money that comes into possession of, or is distributed by, a national government entity and money raised by a private body where it is doing so under statutory authority; and (b) money held by national government entities in trust for third parties

and any money that can generate liability for the Government; “publicise”, in relation to a document, means to make known to the public, through the national or local media— (a) the general nature of the document; and (b) how and where it may be accessed and read by members of the public; “publish”, in relation to a document, includes— (a) publishing the document in a newspaper, Government Gazette or other publication of general circulation in Kenya; or (b) publication of an abridged or summary versions of the documents without loosing the core content of the document; or (c) making the document available for reference at public libraries or offices of national government entities or in archives of those institutions; or (d) posting the document on the internet on a Government website; or (e) if the document relates only to a county government or any of its entities— (i) publishing the document in a newspaper or other publication of general circulation in the County; (ii) making the document available for reference at public libraries or offices of the county government or those entities; or (iii) posting the document on the Internet on a county government website; “receiver of revenue”— (a) in relation to the National government, means a person designated to be a receiver of revenue under section 75; (b) in relation to the county government, means a person designated to be a receiver of revenue under section 157; “recurrent expenditure”— (a) in relation to the national government, means the expenditure that is incurred in operating the services provided by the national government; and (b) in relation to a county government, means the expenditure that is incurred in operating the services provided by that county government, but does not include expenditure incurred in creating or renewing assets belonging to or managed by that government; “regulations” means regulations made under this Act; 15 No. 18 of 2012 Public Finance Management [Rev. 2020] “short term borrowing” means borrowing by a government by way of Treasury Bills, bank-overdraft or other instrument to cover temporary cash shortfalls and is repayable within twelve months; "small enterprise" has the meaning assigned to in section 2 of the Micro