A new Bill sponsored by Rongo MP Paul Abuor seeks to tighten controls on the use of public funds and impose harsh penalties on state officers found guilty of misappropriation. The Public Finance Management (PFM) Act, 2025, aims to ensure financial discipline, safeguard public resources, and expedite payments to contractors.
The proposed legislation mandates the creation of project-specific bank accounts for every government project. Funds allocated by the National Treasury to ministries, state departments, Semi-Autonomous Government Agencies (SAGAs), and parastatals must be deposited exclusively into these accounts. This system is designed to prevent the diversion of funds and ensure that disbursements are used solely for their intended purpose.
According to the Bill, any state officer found guilty of diverting funds from these accounts will face a penalty equivalent to 150% of the misused amount. The fine will be treated as a debt owed to the government. Additionally, such officers will face immediate suspension, possible dismissal, and up to five years imprisonment upon conviction.
“This Bill ensures that all funds from the Treasury are directed to accounts dedicated solely to specific projects, eliminating opportunities for misuse,” said MP Abuor during a press conference at Parliament Buildings. He also warned banks against facilitating unauthorized withdrawals or transfers from project-specific accounts, emphasizing that they could face financial penalties and legal action by the Central Bank of Kenya (CBK).
The Bill also proposes amendments to Section 19 of the existing Act to enhance oversight. The Controller of Budget (CoB) will be required to monitor expenditures and provide quarterly compliance reports for all project accounts. Additionally, the National Treasury will be tasked with developing a digital platform to track account utilization, accessible to both oversight bodies and the public.
To ensure accountability, ministries, SAGAs, and parastatals will need to submit monthly expenditure reports for each project-specific account to the Treasury, Auditor General, and Parliament. The Bill also calls for periodic training for Authority to Incur Expenditure (AIE) holders and accounting officers on their financial management responsibilities.
If passed, the PFM Act, 2025, will mark a significant step toward addressing corruption and streamlining public finance management in Kenya. By introducing these stringent measures, the Bill underscores the government’s commitment to ensuring transparency and accountability in the use of public funds.
