Members of Parliament and senators have reached a deal to allocate Sh415 billion to counties in the 2025/26 financial year, bringing to an end a standoff that had threatened to delay the national budget.

The agreement, announced on Wednesday by the mediation committee handling the Division of Revenue Bill, followed days of intense negotiations between the National Assembly and the Senate. The Sh415 billion figure represents a Sh27.6 billion increase from last year’s Sh387.4 billion and is Sh10 billion more than the initial proposal by the National Treasury.

“This agreement is a crucial step in finalising the national budget and ensuring fair and equitable distribution of resources for the upcoming financial year,” said the mediation committee in a statement.

The breakthrough came during the committee’s fourth meeting, which involved discussions with representatives from both Houses. The National Assembly had supported the Treasury’s Sh405.1 billion proposal, citing tough economic conditions and limited projected revenue from the Finance Bill 2025.

On the other hand, the Senate had pushed for a higher allocation of Sh465 billion, arguing that counties needed more resources after taking up additional devolved functions.

During a session on Monday, Mandera Senator Ali Roba proposed a compromise figure of Sh435 billion, warning that without adequate funds, counties would be unable to deliver on their expanding mandates.

“All additional functions transferred from the national government to county governments should be accompanied by the necessary funding to ensure that counties are adequately resourced,” he said.

However, Budget Committee Chairperson and Alego Usonga MP Samuel Atandi dismissed the Sh435 billion figure, saying it was unrealistic under the country’s current fiscal conditions.

“It would be hard to allocate Sh435 billion to counties given the current financial constraints experienced in the economy,” said Atandi. “Since the Finance Bill 2025 is not generating much revenue for the country, it would be catastrophic to allocate more money to counties, which we do not currently have.”

The Sh60 billion gap between the Senate and National Assembly’s initial proposals had placed the budget process in jeopardy, risking further delays in funding county operations.

With the mediation now concluded, the harmonised Division of Revenue Bill, 2025, will be tabled in both Houses for debate and passage. The National Assembly is expected to introduce the bill later today.