Kenya will by the end of March adopt a framework establishing limits and guidelines for borrowing by county governments to contain fiscal risks.

The framework is set to be incorporated in the government’s medium-term debt strategy, which is consistent with the Public Finance Management Act, aiming to ensure public debt sustainability.

“The ongoing process of devolving responsibilities to the 47 newly created counties is strengthening social cohesion and fostering shared growth,” said the National Treasury.

Treasury said the national government is committed to strengthening accountability and fiscal discipline in the use of devolved resources to deliver better services and enhance equitable economic development.

The Intergovernmental Fiscal Relations Department will receive additional staff to be fully operational while auditing of county outstanding assets and liabilities will be finalised by the end of September 2015.

Treasury Cabinet Secretary Henry Rotich said a consultative forum will be held to ensure revenue raising initiatives including fees and charges at the county level conform both to the Constitution and the PFM Act.

In a letter of intent sent to International Monetary Fund managing director Christine Lagarde, Treasury said it intends “To avoid duplication and/or distortions in the introduction of local taxes and fees that could hurt the business environment” through a consultative process.

Mining firms, which are already paying taxes to the national government, are coming under increasing pressure from some county governments, who are demanding to be paid more levies on minerals extracted from their region. This could increase the cost of doing business in the country.

The national government will support counties to build their capacity for revenue collection by automating county revenue collection and leveraging on the Kenya Revenue Authority infrastructure.

“We consider creation of a conducive business environment a prerequisite for strong economic growth and poverty reduction. Our efforts are focused on regulatory reforms to reduce the cost of doing business,” said Mr Rotich. He said drafts of the Company Bill and Insolvency Bill, currently under consideration by parliament, are expected to be enacted by September 2015.

Plans are also under way to consolidate all government approvals for starting a business at one access point; commence company registration online and develop a policy on preferential debtors and creditors to facilitate the implementation of the new insolvency framework.

Other focus areas include completing digitisation of construction records in all counties; finalising the declaration module under the Single Customs Window to provide a one-stop shop for faster import clearance of cargo and submitting to parliament a new Bill aimed at easing property registration.

Salary payments will be linked with the Integrated Financial Management Information System to boost the integrity of the government’s payroll by the end of June this year.