PAYMENTS

Treasury to release Sh23 billion to suppliers in VAT refund

The government has stepped up plans to clear pending bills estimated at Sh100 billion owed to suppliers by the state and private sector

In Summary
  • The Sh13 billion to suppliers is part of Sh49 billion to be released by the government by the end of this current financial year pending verification.
  • This is good news for thousands of suppliers across the country who have taken an operational hit from delayed payments.
Treasury Cabinet Secretary Ukur Yatani on November 26, 2019
REPRIEVE: Treasury Cabinet Secretary Ukur Yatani on November 26, 2019
Image: /EZEKIEL AMING'A

The government will on Friday start disbursing Sh13 billion owed in pending bills and a further Sh10 billion tax refunds as part of Covid-19 economic stimulus to increase liquidity in the market.

The move is likely to resuscitate cash-strapped government suppliers who have been waiting for the money for almost two years now.

Treasury CS Ukur Yatani tweeted, "For the avoidance of doubts in addition to ongoing social programmes. Other interventions are; increasing liquidity in the economy (payment of pending bills of Sh13 billion and VAT refunds of Sh10 billion and hire of health staff). These will be rolled out from Friday.”

 

The CS said the National Treasury’s response to Covid-19 pandemic cuts across all sectors. So far, Sh18 billion has been disbursed for various interventions with more resources to be released with the passage of the supplementary budget.

The Sh13 billion to suppliers is part of Sh49 billion to be released by the government by the end of this financial year pending verification.

"The Kenyan government plans to pay pending bills to suppliers and quickly process tax refunds for firms to support the economy in the face of the coronavirus crisis," Yatani told Reuters late last month.

According to the news cable, Yatani said Sh49 billion will be released to offset the unpaid bills, and a further Sh10 billion released to expedite the payment of value-added tax refunds to businesses in the next two-three months.

This is good news for thousands of suppliers across the country who have taken an operational hit from delayed payments, with some auctioned by creditors or closed shops.

This has had a spiral effect to the country’s economic growth, with Central Bank of Kenya indicating that pending bills slowed the 2019-20 growth by almost 100 basis points.

The high job losses witnessed in the past two quarters of the current financial year were partly attributed to a lack of liquidity in the economy due to high pending bills, among other factors.

The government has in recent months stepped up plans to clear pending bills estimated at Sh100 billion owed to suppliers by national governments, counties and the private sector.

In November last year, for instance, President Uhuru Kenyatta directed that all verified and genuine pending bills be paid immediately, a second directive after June 1, when he first called for clearance of pending bills by the national government and counties.

The President revisited the issue of the pending bills at State House, Mombasa, early in January when he said the government would float an infrastructure bond of Sh150 billion, with the funds raised going to the completion of ongoing road and infrastructure projects.

 “With the planned infrastructure bond of Sh150 billion, all infrastructure-related bills will be settled early this year and aid the completion of all ongoing road and infrastructure projects across our homeland,” the President said.

In February, CS Yatani spelt out tough measures to accounting officers of state agencies and ministries, asking them to clear what is owed to suppliers or face unspecified actions.

Edited by A.N