The State will partly use a mini-budget planned for next month to pay contractors’ dues amid renewed effort to clear up the over Sh630 billion worth of pending bills to ease cash-flow woes facing businesses.
National Treasury Principal Secretary Chris Kiptoo on Wednesday said the committee tasked with verifying the bills will present the first list of claims by mid-March paving the way for the inclusion of the dues in the supplementary budget.
Firms that delivered goods or services to State agencies and ministries have been grappling with cash flow headaches caused by non-payment of the cash, triggering an uproar among the business community.
State entities owed firms and contractors Sh631.56 billion in unpaid bills as of September last year, with the bigger chunk of Sh509.37 billion or 64.1 per cent held by State Corporations and the remaining Sh121.19 billion by ministries, departments, and agencies.
The government in June last year formed a Pending Bills Verification Committee to audit liabilities for the period between 2005 and 2022.
“We are hoping that this (verification) will be completed within one year, but we have given them three months to give us the first report,” Dr Kiptoo said.
“The three months ends in mid-March and we expect them to finalise and part of what is verified, we will include in the supplementary budget for March-April. The rest will be settled depending on the fiscal space that we have.” The National Treasury will table in Parliament the second supplementary budget for the current financial year between next month and April.
The timelines are in line with the agreement with the International Monetary Fund to have a final payment plan of the pending bills by May.
Accumulation of the unpaid billions has gone on un-abated as State agencies continue to flout directives from the National Treasury. The Public Finance Management (National Government) Regulations 2015 require them to settle pending bills as a first charge in their budgets.
The bills grew from Sh56.78 billion in June 2021 highlighting the impact of non-compliance to the directives.
The Kenya Association of Manufacturers has repeatedly warned of the adverse impact of the accumulation of pending bills, saying that businesses have been forced to scale down while other firms increased reliance on bank loans to fund operations.
The Controller of Budget, Agnes Nyakango has also been flagging pending bills as a key concern, saying that the National Treasury should expedite efforts to have State entities settle the dues.
Public entities have up until tomorrow to present details on pending bills in their books to the verification committee, paving the way for their audit and subsequent payment.
