Pending bills: Will counties, state agencies heed Treasury’s call?

Will State agencies and county governments heed the Treasury’s latest call and clear pending bills?

This is the question that could be lingering in the minds of thousands contractors and suppliers whose businesses are at risk of collapsing due to huge pending bills.

For the fourth consecutive year, the Treasury has issued ultimatum to the agencies to clear the debt which has threatened the existence of many businesses.

In June 2019, Uhuru directed all national and county government agencies to clear their pending bills that did not have audit queries within a month.

“Unfortunately, pending payments have negatively affected many businesses, particularly those bulk of capital is now locked in nonpayment," Uhuru said during Madaraka day celebrations in Narok.

"This has also reduced overall spending and business activity on our economy.”

However, all seem to have fell in deaf ear as they continue to accumulate more debts, further injuring their contractors.

According to the latest report by Controller of Budget Margaret Nyakang’o on budget implementation review for the first half of the year, counties owe their suppliers Sh128.94 billion.

Nairobi, Kiambu, Mombasa, Wajir, Machakos and Tana River are listed as some of the counties with huge pending bills.

Nairobi’s debt increased to Sh84.01 billion from Sh54.32 billion in June last year, Kiambu’s stood at Sh5.12 billion, Mombasa’s at Sh4.29 billion and Wajir's at Sh3.82 billion.

However, according to the latest audit report on the counties’ pending bill, only Sh45.5 billion are supported and thus ripe for payment.

The auditor declared bills amounting to Sh107 billion as ineligible due to lack of authenticity.

For the ministries, departments and agencies, their debts grew by Sh43.53 billion to stand at Sh467.7 billion as at December 31, 2021.

Among the state entities with huge pending bills are the Executive office that owes Sh520.67 million; the Nairobi Metropolitan services(Sh4.42 billion) and Devolution department(Sh808.95 million).

On Thursday, Treasury CS Ukur Yatani once against issued an ultimatum to the devolved units and MDAs to clear the bills by June 30.

“Continued delays in payment of pending bills to entities that provide goods and services to both national and county governments have affected liquidity and operations of these entities,” the CS said.

"In a number of cases, this had led to the businesses, affecting livelihoods of the suppliers."

“We call upon all the MDAs and counties to avoid accumulation of pending bills and ensure that payments are made as and when due," Yatani said.

The message was the same last year when Yatani threatened to withholds funds to entities that do not honour the debt obligations.

“I direct government ministries, departments and agencies and the county governments to clear all their pending bills by June 30, 2021,” Yatani had said last year.

The Public Finance Management framework requires that pending bills are settled in time as specified in contract agreements to avoid the accumulation of arrears.

“All pending bills should be budgeted as a first charge and paid without delay as provided for under Regulation 42(1a) of Public Finance Management Regulations, 2015,” she said.

The regulation states that “debt service payments shall be a first charge on the Consolidated Fund and the accounting officer shall ensure this is done to the extent possible, so that the government does not default on debt obligations."

(Edited by Tabnacha O)