(2) In carrying out its functions under subsection (1) (a) and (b), the Committee shall consider recommendations from the Commission on Revenue Allocation, County Executive Committee member responsible for finance, the Intergovernmental Budget and Economic Council, the public and any other interested persons or groups. Parliamentary Budget Office Parliamentary Budget Office continued. 9. (1) The office known as the Parliamentary Budget Office shall continue to exist as an office of the Parliamentary Service. (2) In addition to any other criteria established by the Parliamentary Service Commission, the Budget Office shall consist of persons appointed on merit by virtue of their The Public Finance Management Act, 2012 39 experience in finance, economics and public policy matters. Responsibilities of the Parliamentary Budget Office.

10. (1) The Parliamentary Budget Office shall- (a) provide professional services in respect of budget, finance, and economic information to the committees of Parliament; (b) prepare reports on budgetary projections and economic forecasts and make proposals to Committees of Parliament responsible for budgetary matters; (c) prepare analyses of specific issues, including financial risks posed by Government policies and activities to guide Parliament; (d) consider budget proposals and economic trends and make recommendations to the relevant committee of Parliament with respect to those proposals and trends; (e) establish and foster relationships with the National Treasury, county treasuries and other national and international organisations, with an interest in budgetary and socio-economic matters as it considers appropriate for the efficient and effective performance of its functions; (f) subject to Article 35 of the Constitution, ensure that all reports and other documents produced by the Parliamentary Budget Office are prepared, published and publicised not later than fourteen days after production; and (g) report to the relevant committees of Parliament on any Bill that is submitted to Parliament that has an economic and financial impact, making reference to the fiscal responsibility principles and to the financial objectives set out in the relevant Budget Policy Statement; and (h) propose, where necessary, alternative fiscal framework in respect of any financial year. The Public Finance Management Act, 2012 40

(2) In carrying out its functions under subsection (1), the Parliamentary Budget Office shall observe the principle of public participation in budgetary matters. PART III— NATIONAL GOVERNMENT RESPONSIBILITIES WITH RESPECT TO THE MANAGEMENT AND CONTROL OF PUBLIC FINANCE Establishment of the National Treasury Establishment of the National Treasury. 11. (1) There is established, pursuant to Article 225 of the Constitution, an entity of the national government to be known as the National Treasury. (2)The National Treasury shall comprise of— (a) the Cabinet Secretary; (b) the Principal Secretary; and (c) the department or departments, office or offices of the National Treasury responsible for economic and financial matters.

(3) The Cabinet Secretary shall be the head of the National Treasury. General responsibilities of the National Treasury. 12. (1) Subject to the Constitution and this Act, the National Treasury shall— (a) formulate, implement and monitor macro-economic policies involving expenditure and revenue; (b) manage the level and composition of national public debt, national guarantees and other financial obligations of national government within the framework of this Act and develop a framework for sustainable debt control; (c) formulate, evaluate and promote economic and financial policies that facilitate social and economic development in conjunction with other national government entities; (d) mobilise domestic and external resources for financing national and county government The Public Finance Management Act, 2012 41 budgetary requirements; (e) design and prescribe an efficient financial management system for the national and county governments to ensure transparent financial management and standard financial reporting as contemplated by Article 226 of the Constitution: Provided that the National Treasury shall prescribe regulations that ensure that operations of a system under this paragraph respect and promote the distinctiveness of the national and county levels of government; (f) in consultation with the Accounting Standards Board, ensure that uniform accounting standards are applied by the national government and its entities; (g) develop policy for the establishment, management, operation and winding up of public funds; (h) within the framework of this Act and taking into consideration the recommendations of the Commission on Revenue Allocation and the Intergovernmental Budget and Economic Council, prepare the annual Division of Revenue Bill and the County Allocation of Revenue Bill; (i) strengthen financial and fiscal relations between the national government and county governments and encourage support for county governments in terms of Article 190(1) of the Constitution in performing their functions; and (j) assist county governments to develop their capacity for efficient, effective and transparent financial management in consultation with the Cabinet Secretary responsible for matters relating to intergovernmental relations.

(2) The National Treasury shall have the following functions, in addition to those in subsection (1)— (a) promote transparency, effective management and accountability with regard to public finances in the national government; (b) ensure proper management and control of, and accounting for the finances of the national government and its entities in order to promote the efficient and effective use of budgetary resources at the national level; The Public Finance Management Act, 2012 42 (c) co-ordinate the preparation of annual appropriation accounts and other statutory financial reports by the national government and its entities; (d) prepare annual estimates of revenue of the national government, and co-ordinate the preparation of the budget of the national government; (e) consolidate reports of annual appropriation accounts and other financial statements of the national government and county governments and their entities; (f) report every four months to the National Assembly on the implementation of the annual national budget on areas not reported on by the Controller of Budget; (g) be the custodian of an inventory of national government assets except as may be provided by other legislation or the Constitution; (h) monitor the management of the finances of public enterprises and investments by the national government and its entities; (i) monitor the financial aspects of risk management strategies and governance structures for the national government and national government entities; (j) monitor the financial performance of state corporations; and (k) issue guidelines to national government entities with respect to financial matters and monitoring their implementation and compliance.

(3) The National Treasury shall take such other action, not inconsistent with the Constitution, as will further the implementation of this Act. Powers of the National Treasury. 13. (1) The Cabinet Secretary may generally give to the National Treasury such powers as are necessary to facilitate the Cabinet Secretary and national government to exercise their powers in the Constitution, and in particular, the National Treasury may do all or any of the following— (a) with prior notification to the entity, access any system of public financial management and control of national government entity; (b) where reasonably necessary in the execution of its functions, access the premises of any national State The Public Finance Management Act, 2012 43 Organ or other public entity and inspect the entity’s records and other documents relating to financial matters after giving notice; (c) require national government entities to comply with any specified applicable norms or standards regarding accounting practices and budget classification systems; (d) require any public officer in the national government to provide information and if necessary, explanations with respect to matters concerning public finance: Provided that a person providing information shall not be liable if at the time of providing the information that person, in writing, objected to providing such information on grounds that the information may incriminate him or her; (e) provide any County Treasury with any information as it may require to carry out its responsibilities under the Constitution and this Act; and (f) perform any other act as the Cabinet Secretary may consider necessary including power to intervene where a state entity or state organ fails to operate a financial system that complies with requirements provided for under this Act or is in serious material breach under this Act or in accordance with Articles 190 and 225 of the Constitution.

(2) The National Treasury may authorise any of its officers in writing to carry out a responsibility or exercise a power specified in the authorisation on behalf of the National Treasury. (3) When acting in terms of subsection (2), an authorised officer, if requested by the person in relation to whom the responsibility or power is being carried out or exercised, shall produce the authorisation for inspection and failure to comply with that request invalidates any subsequent action purporting to be taken in terms of the authorisation.

(4) An authorisation given under subsection (2) remains in force for a period specified in it or, if no period is specified, until it is revoked by the National Treasury. (5) The National Treasury may, in writing, revoke or vary an authorisation given under subsection (2). The Public Finance Management Act, 2012 44 Secondment of public officers by National Treasury to County Treasury. 14. (1) Subject to Articles 189 and 190 of the Constitution, the National Treasury may, upon request by the County Treasury, and for a period that shall be agreed, second to a County Treasury for purposes of capacity building, such number of officers as may be necessary for the County Treasury to better carry out its functions under this Act.

(2) A public officer seconded to a County Treasury under subsection (1), shall be deemed to be an officer of the County Treasury and shall be subject only to the direction and control of the County Treasury. The National Treasury to enforce fiscal responsibility principles. 15. (1) The National Treasury shall manage the national government’s public finances in accordance with the Constitution, and the principles of fiscal responsibility set out in subsection (2). (2) In managing the national government’s public finances, the National Treasury shall enforce the following fiscal responsibility principles— (a) over the medium term a minimum of thirty percent of the national and county governments budget shall be allocated to the development expenditure. (b) the national government’s expenditure on wages and benefits for its public officers shall not exceed a percentage of the national government revenue as prescribed by regulations; (c) over the medium term, the national government’s borrowings shall be used only for the purpose of financing development expenditure and not for recurrent expenditure; (d) public debt and obligations shall be maintained at a sustainable level as approved by Parliament for the national government and the county assembly for county government; (e) fiscal risks shall be managed prudently; and (f) a reasonable degree of predictability with respect to the level of tax rates and tax bases shall be maintained, taking into account any tax reforms that may be made in the future.

(3) For the purposes of subsection (2)(c), short term borrowing shall be restricted to management of cash flows The Public Finance Management Act, 2012 45 and in case of a bank overdraft facility it shall not exceed five per cent of the most recent audited national government revenue. (4) The National Treasury shall ensure that the level of National Debt does not exceed the level specified annually in the medium term national government debt management strategy submitted to Parliament. (5) Regulations made under this Act may add to the list of fiscal principles set out in subsection (2). National government deviation from financial objectives.