(2) Regulations under subsection (1) shall include The Public Finance Management Act, 2012 71 measures to ensure public disclosure, accountability and participation in relation to the grants, including— (a) timely public disclosure to intended beneficiaries of the allocation and disbursement of grants to grant recipients; (b) timely public disclosure by grant recipients to intended beneficiaries of expenditure and performance achieved in relation to the grant; (c) measures to facilitate intended beneficiaries to participate in the design and management of projects or public services financed by the grant; (d) measures allowing intended beneficiaries to report instances of non-compliance with the regulations or grant agreement; (e) sanctions to be imposed on grant recipients for non-compliance with grant conditions by any grant recipient; and (f) obligations of a public officer or third party authorised to receive, control or pay public money as grants.

(3) A third party shall not receive, have custody of, or pay public money otherwise than in accordance with an authorisation given in accordance with regulations made under subsection (1). (4) A third party who contravenes provision under subsection (3), commits an offence and is liable on conviction to a term of imprisonment not exceeding two years or to a fine not exceeding one million shillings, or to both and shall make good the loss arising from the use of public funds contrary to law. Authority for borrowing by the national government.

49. (1) Subject to provisions of this Act, the Cabinet Secretary may, on behalf of the national government, raise a loan only if the loan and the terms and conditions for the loan are set out in writing and in accordance with— (a) the fiscal responsibility principles and the financial objectives set out in the most recent Budget Policy Statement; and (b) the debt management strategy of the national The Public Finance Management Act, 2012 72 government over the medium term. (2) A loan may be raised either within Kenya or from outside Kenya. Obligations and restrictions on national government guaranteeing and borrowing. 50.(1) In guaranteeing and borrowing money, the national government shall ensure that its financing needs and payment obligations are met at the lowest possible cost in the market which is consistent with a prudent degree of risk, while ensuring that the overall level of public debt is sustainable.

(2) The national government may borrow money in accordance with this Act or any other legislation and shall not exceed a limit set by Parliament. (3) The national government may borrow money only for the budget as approved by Parliament and the allocations for loans approved by Parliament. (4) The guarantee of debt shall be done in terms of criteria agreed with the Intergovernmental Budget and Economic Council and prescribed in regulations approved by Parliament. (5) Parliament shall provide for thresholds for the borrowing entitlements of the national government and county governments and their entities.

(6) A public debt incurred by the national government is a charge on the Consolidated Fund, unless the Cabinet Secretary determines, by regulations approved by Parliament, that all or part of the public debt is a charge on another public fund established by the national government or any of its entities. (7) The Cabinet Secretary shall ensure that the proceeds of any loan raised under this Act are paid into the Consolidated Fund or into any other public fund established by the national government or any of its entities as Cabinet Secretary may determine in accordance with regulations approved by Parliament.

(8) The Cabinet Secretary may, by regulations approved by Parliament, establish such sinking fund or funds for the redemption of loans raised under this Act by the national government. (9) The Cabinet Secretary may, subject to Article 227 of the Constitution and in accordance with national legislation The Public Finance Management Act, 2012 73 on Public Procurement and Asset Disposal— (a) appoint advisers, agents and underwriters for the purpose of raising loans and issuing, managing or redeeming national government securities; and (b) enter into agreements with the advisers, agents and underwriters appointed under paragraph (a) on the role to be undertaken by them and the remuneration to be paid to them.

(10) Any expenses incurred in connection with borrowing by the national government or the issue of national government securities is a charge— (a) on the Consolidated Fund; or (b) on such other public fund established by the national government or any of its entities as the Cabinet Secretary may determine by regulations approved by Parliament. (11) The costs, interests and principal payments made by the national government concerning loans to each level of government shall be passed on by the national government to the relevant level of government.

(12) A copy of the details of the expenses and costs referred to under subsection (10) and (11) shall be submitted to the Controller of Budget and to Parliament, at the end of each quarter. The Public Finance Management Act, 2012 74 Borrowing by national government entities. 51. (1) A national government entity may borrow in accordance with this Act or any other Act of Parliament. (2) A national government entity shall obtain the approval of the Cabinet Secretary for its intended program of borrowing, refinancing and repayment of loans — (a) over the medium term; and (b) for the forthcoming financial year, prior to the beginning of that financial year.

(3) A national government entity shall also obtain the approval of the Cabinet Secretary before making any changes to its program of borrowing, refinancing and repayment during a financial year. (4) The national government is not liable to contribute towards payment of any debt or liability of a national government entity, unless the national government has guaranteed the debt or liability. Persons authorized to execute loan documents at national government. 52. (1) The Cabinet Secretary or any person designated by the Cabinet Secretary in writing is authorised to execute loan documents for borrowing by the national government.

(2) Despite the provisions of subsection (1), the following persons are authorised to execute loan documents for borrowing by a National government entity— (a) the accounting officer responsible for the entity; or (b) any other specified officer authorised by legislation to execute such documents on behalf of the entity. Issuance of securities by national government. 53. (1) The national government may issue national government securities, whether for money that it has borrowed or for any other purpose, only in circumstances expressly authorised by this Act.