The Stages of Public Spending
 
Once parliament approves the annual budget, money does not automatically leave the treasury. Public expenditure moves through a strict administrative process:
  1. Apportionment/Allocation: The Treasury releases spending authority (exchequer warrants) to line ministries, usually on a quarterly basis.
  2. Commitment: The spending agency places a formal order or signs a contract, locking in a portion of their budget allocation.
  3. Verification: The agency inspects the delivered goods or services to confirm they match the contract terms before approving the payment invoice.
  4. Payment: The Treasury or agency issues an electronic funds transfer (EFT) to clear the verified supplier invoice.

Treasury Single Account (TSA) Architecture
 
Historically, individual government ministries maintained hundreds of separate commercial bank accounts. This led to a fragmented system where some departments held idle cash balances while the central treasury was forced to borrow expensive short-term funds to cover deficits.
               [ Central Bank of Kenya / Central Bank ]
                                  |
               +------------------+------------------+

               |        Treasury Single Account      |
               +------------------+------------------+
                                  |
       +--------------------------+--------------------------+
       v                                                     v
[ Ledger Account: Ministry of Health ]      [ Ledger Account: Ministry of Education ]

The Treasury Single Account (TSA) consolidates all government cash balances into a unified structure, typically held at the Central Bank. Individual ministries maintain subsidiary ledgers rather than physical bank accounts. This architecture gives the Treasury real-time visibility over state cash, lowers borrowing costs, and streamlines national liquidity management.
 
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