• Economy has stagnated because government has not been paying its debts on time
• Treasury has not made transfers to 15 counties that have delayed settling pending bills
Yesterday Deputy Controller of Budget Stephen Masha met the Senate Finance committee and advised them to prepare a law to compel counties to pay debts within 60 days (see P7).
The economy has been stagnating for the past two years because government has delayed paying its debts. This slowdown was compounded by the interest rate cap which caused banks to reduce lending to the private sector. Now that the cap has gone, we can expect an increase in liquidity in the economy.
Last month President Uhuru Kenyatta instructed that ministries, counties parastatals should pay all their outstanding debts before the end of November.
There was considerable progress although many debts remain unpaid. Some 15 counties have not received their latest allocations from the Treasury because they have not cleared their pending bills.
Yesterday, Masha proposed to the Senate that counties should automatically pay interest if they don't pay their bills within the specified period. This will not solve the problem of delayed payment by counties, especially if the Treasury delays making transfers to the counties, but it will be a good step forward.
Quote of the day: "There are no dangerous thoughts; thinking itself is dangerous."
The German-American historian died on December 4, 1975