The Senate Standing Committee on Finance and Budget has launched a major inquiry into the National Treasury’s decision to freeze funds for Meru County, opening a heated debate over devolution, pending bills, and the rights of investors.

The high-stakes session, held at Parliament Buildings on Thursday, April 30, 2026, brought together members of the committee, Meru Governor Isaac Mutuma M’Ethingia, and Controller of Budget Dr. Margaret Nyakang’o.

At the center of the dispute is a massive court-adopted arbitral award that has grown from Ksh 337,070,485 to approximately Ksh 642.9 million due to a 14 percent annual interest rate.

Senate Questions Treasury Over Missing Evidence

Committee Chairperson Senator Ali Roba demanded answers over the National Treasury’s move to freeze funds and questioned the lack of clear evidence showing the investor’s alleged non-compliance.

He challenged officials to explain why no formal proof had been presented despite the existence of a termination clause.

According to Senator Roba, the issue was not just about the contract but about protecting continuity of business and ensuring fairness in public administration.

He insisted that the committee would not allow any decision that threatens essential county services without full transparency.

Meru Funds Freeze Temporarily Halted

The Senate Committee has now paused the finality of the fund stoppage and ordered the Ministry of Trade to provide formal records of an alleged presidential commitment to settle the debt.

Lawmakers want proof of claims that the national government had agreed to assume responsibility for the liability.

This move effectively delays a final decision on whether Meru County should continue facing a 50 percent stoppage of funds.

Controller of Budget Defends 50% Fund Stoppage

Controller of Budget Dr. Margaret Nyakang’o defended the decision, saying Meru County had failed to settle the debt for over six years.

She described the county’s failure as a serious and persistent breach of the Public Finance Management (PFM) Act.

According to the CoB, the matter also exposes Kenya to possible international diplomatic complications because the investor involved is of French nationality.

The stoppage officially took effect on April 10, 2026.

Senators Raise Concerns Over Selective Punishment

The committee session became more intense after senators questioned whether Meru was being unfairly targeted while many other counties also have huge pending bills.

Vice Chairperson Senator Tabitha Mutinda strongly criticized the move, asking why only Meru was facing such harsh action.

She pointed out that suppliers across all 47 counties have suffered for years without payment, with many losing property and taking loans to survive.

She questioned whether the action was only because the creditor in this case was a foreign investor.

The senator also highlighted conflicting figures between the National Treasury and the Controller of Budget.

While the CoB confirmed that Meru had already paid Ksh 200 million, Treasury records reportedly showed only Ksh 20 million, raising concerns over serious inconsistencies.

Governor Isaac Mutuma Defends County Position

Governor Isaac Mutuma M’Ethingia told the committee that Meru County had stopped allocating funds toward the debt because it believed the national government had taken over the responsibility following a presidential directive.

This position was supported by Meru Senator Kathuri Murungi, who confirmed that the President had reportedly agreed to assist the county during a high-level meeting.

However, the Controller of Budget criticized the county for failing to include the debt in its September 2025 Pending Bills Action Plan.

This omission became another major point of concern during the inquiry.

Senators Question Why Warning Signs Were Missed

Senator Okenyuri questioned why the Controller of Budget did not flag the omission earlier during budget reviews before the issue escalated into a full crisis.

Lawmakers argued that earlier intervention could have prevented the current financial siege facing the county.

This raised broader questions about accountability and whether national institutions acted too late.

Meru County Budget Hangs in the Balance

The fate of Meru County’s 2025/2026 budget now remains uncertain as the Senate Committee prepares its final report.

The committee must decide whether to uphold the strict recovery plan recommended by the Controller of Budget or lift the stoppage in recognition of ongoing political negotiations.

Senator Kathuri Murungi emphasized that the money already paid by the county was significant and not something that could be dismissed lightly, especially for a county already struggling with a high wage bill.

Final Decision Could Shape Devolution Debate

The outcome of this case could have major implications beyond Meru County.

It touches on larger national questions involving devolution, pending bills, investor protection, and the relationship between counties and the national government.

As the Senate prepares its final report, many leaders are watching closely to see whether Meru will be granted relief or forced into a strict financial recovery plan.

For now, the county’s budget and service delivery remain on a razor’s edge.