- At least Sh300 billion are owed to local suppliers by the national government
- Kanini Kega asked state-funded agencies to level within means to help the exchequer cut the budget deficit and debt.
The National Treasury has put state agencies and county governments on notice over pending bills, saying it gave out 100 per cent allocation for the year ended June 30.
Speaking during the official launch of the FY2022/23 and medium-term budget preparation process in Nairobi yesterday, Treasury CS Ukur Yatani said state-funded entities yet to clear pending bills will be punished.
''We issued necessary allocations to both counties and state bodies to clear pending bills. We hope that all suppliers and contractors were paid. We will deal with those in breach,'' Yatani said.
Early last month, the exchequer cleared the outstanding balance of Sh26.9 billion owed to counties for the financial year 2020/2021 which ended on June 30.
The disbursement of the sum saw Treasury clear in full the Sh316.5 billion revenue allocation for the financial year. It also released a conditional grant amounting to Sh28.5 billion to the devolved units.
This followed another disbursement of ShSh43.5 billion to counties in April with strict directives to clear pending bills.
''The payment of these bills will be closely monitored and future transfers weighed against the fulfillment of this important obligation to the private sector,'' the Treasury chief said in a statement.
He said the release of the funds in tho the market was to spur economic activity at the county level as part of our ongoing and inclusive Economic Recovery Programme.
The government has been on the spot over unpaid pending bills to suppliers and contractors, sending most of them into bankruptcy.
According to the Central Bank of Kenya, failure by the national and county government to settle pending bills over time had weakened the economy just before Covid-19 set in, causing a recession in the economy.
Last year, the banking regulator linked two per cent of total non-performing loans to unpaid bills, running into hundreds of billions.
While the actual total figure of pending bills is not clear, at least Sh300 billion are owed to local suppliers by the national government, with more billions owed by county governments to their suppliers.
The Ministry of Transport and Infrastructure leads the pack with Sh99 billion shillings owed to suppliers under the infrastructure department.
Of this, Sh31 billion are due to landowners who surrendered their parcels for the construction of public infrastructure.
On the budget-making process, Yatan called on the political class to be alive to the country's economic growth needs, warning that the financial year could see heightened political activities, especially during the fourth quarter.
''We are hopeful that the electioneering period will be well managed to avoid erosion of investor confidence as this could affect the route to accelerated economic growth,'' Yatani said.
He added that the state will, however, continue to monitor these developments and take appropriate action to safeguard the economy and livelihoods.
''Uncertainty still surrounds the global economic outlook, especially in terms of how the pandemic will unfoldKenya's economy is expected to grow six per cent,'' Yatani said.
The National Assembly's Budget and Appropriations Committee chair Kanini Kega asked state officials to be diligent in formulating expenditure plans for the upcoming financial year.
''It is my appeal to sector working group to prioritize and allocate resources to areas that will have the greatest impact in addressing the challenges facing Kenyans,'' Kega said.
He asked all state-funded agencies to level within means to help the exchequer cut the budget deficit and debt.