Zachary Ochuodho @zachuodho

Treasury has set aside Sh23.1 billion that ministries and governments will use to settle pending bills.

Cabinet Secretary Ukur Yatani said out of the amount, Sh12.1 billion would settle verified pending bills owed by ministries and departments while Sh10 billion will pay verified VAT refund claims.

“Mr Speaker, we have noted that several State corporations and semi-autonomous government agencies (Sagas) hold significant amounts of pending bills owed to contractors, suppliers, Sacco remittances and other statutory deductions,” said Yatani.

To further support and enhance the liquidity of these enterprises, he proposed to fast track payment of outstanding verified VAT refund claims and pending bills owed to businesses.

“This is in addition to the Sh23.1 billion approved by this House in April 2020 in the supplementary Budget for the same purpose,” he said.

Yatani warned the institutions and organisations that this practice should not be allowed to continue.

Payment plan

According to Yatani, a multi-agency team formed by Treasury to deal with existing historical and contested pending bills has made significant progress in settling some of the bills.

“I direct principal secretaries and accounting officers to clear pending bills in ministries, development and agencies (MDAs) and Sagas respectively,” he said.

The CS said Treasury would withhold exchequer releases to MDAs or Sagas with pending bills, until an approved payment plan is agreed upon.

He also urged county governments still holding pending bills to ensure they pay them by June 30. 

“In this respect, I urge county governments which have not completed paying verified pending bills owed to various suppliers to do so expeditiously,” he said.

But while this is commendable, analysts say the allocation is like a drop in the ocean given that the total amount of pending bills is estimated to be Sh368.9 billion.

Churchill Ogutu, a senior analysts at Genghis Capital said given the total amount, owed by both national and county governments, the allocation would not do much.

Affected ministries

According to the Budget Appropriation Committee (BAC) as at end-March 2020, pending bills were estimated at Sh368.9 billion – which include transport, public works and housing, agriculture and education.

Transport, public works and housing has pending bills arising from the operations of the Standard Gauge Railway (SGR) accumulating to Sh38 billion.

However, in the education sector, several public universities, including well-established ones, have accumulated pending bills amounting to Sh19 billion on account of non-remittance of statutory deductions such as Pay-As-You-Earn.