Treasury CS Ukur Yatani has written to 15 counties informing them that they will not receive their allocations for failing to settle pending bills.
The November 19 letter was addressed to Narok which as at October 28 owed suppliers Sh1.8 billion, Machakos (Sh1.1 billion), Nairobi (Sh21 billion), Vihiga (Sh1.8 billion), Isiolo (Sh1.09 billion), and Tana River (Sh1.09 billion).
Others are Migori (Sh970 million), Tharaka Nithi (Sh921 billion), Bomet (Sh893 million), Kirinyaga (Sh1.05 billion), Nandi (Sh1.12 billion), Mombasa (Sh4.07 billion), Kiambu (Sh1.56 billion), Garissa (Sh1.57 billion), and Baringo (Sh35 million).
The affected counties have up to December 1 to comply with the directive, failure which their monies would be locked as stipulated in Section 97 of the Public Finance Management Act (PFMA).
“I hereby stop the transfer of the equitable share of national revenue for the financial year 2019-20 because of the failure by your government to pay the eligible pending bills,” Yatani’s letter reads.
The CS cited the counties for failing to heed the resolutions of the Intergovernmental Budget and Economic Council (IBEC) chaired by Deputy President William Ruto.
The IBEC resolved that county governments would pay eligible pending bills on a priority basis as a first charge on the county revenue fund by end of financial year 2019/20. Counties owed their suppliers Sh64.2 billion as of October 28.
“Reports from the Controller of Budget indicate that you have not made payment of pending bills between July 1 and October 31,” the letter reads.
Treasury reports that the 47 counties had received about Sh80.4 billion as of November 17.
Some of the county governments have been reprimanded for not establishing committees to review pending bills presented to them as resolved by the IBEC.
Yatani says he intervened as the county governments are involved in “serious or persistent material breach of the law relating to public finances”.
“Please note that the failure to make payments when they are due is a material breach of the PFMA,” the CS said, adding that the situation has stifled the growth of the economy.
He said that nonpayment by government entities has adverse effects on business, including SMEs and those owned by vulnerable populations – women, youth, and persons with disabilities.
To add to the affected counties’ woes, the government warned that it would not release any conditional grants until the issue of the bills is settled.
Yatani asked the counties without pending bills committees to form them and furnish the Treasury, Budget Controller and Auditor General with a report on their status.
The Senate Finance Committee, warning of a crisis in the devolved units, has invited Yatani to shed more light on the directive.
