Sh43.5b too little to pay pending bills, CoG insists
By Rawlings Otieno, June 25, 2021
A day after the National Treasury released Sh43.5 billion to county governments with the rider that the money must be used to clear all pending bills, governors have come out fighting saying the money was not sufficient.
The Council of Governors (CoG) yesterday said the money was not sufficient to clear all pending bills and fund county operations.
CoG Finance committee chair Ndiritu Muriithi (Laikipia) said a large proportion of the money would go to salary arrears and remitting of statutory deductions to the Kenya Revenue Authority, the National Hospital and Insurance Fund and the National Social Security Fund.
“Whereas county governments remain committed to clearing all the eligible pending bills, it is important to note that as such, the amount disbursed is not sufficient to clear all pending bills,” said Muriithi.
The county chiefs argued that National Treasury was yet to release funds for the month of May and June of the Financial Year 2020/21 amounting to Sh58 billion.
Private sector
Muriithi stated that the amount disbursed by National Treasury Cabinet Secretary Ukur Yatani comprised of Sh39 billion as equitable share out of which Sh3.5 billion was arrears owed to Nairobi county government, Sh8.692 billion is equitable share owed to 16 county governments for the month of March and Sh27.052 billion owed to 47 county governments for the month of April.
On Wednesday, Yatani announced that the Treasury had released Sh43.5 billion and asked the county governments to prioritise the payment of pending bills owed to suppliers and remitting of employees’ statutory deductions.
“The payment of these pending bills will be closely monitored and future transfers weighed against the fulfillment of the obligation to the private sector so as to spur economic activity at the county level,” said Yatani.
According to Muriithi, the knock-on-effect of the perennial delay in disbursement of funds by the National Treasury was the inability of county governments to deliver services to citizens.
He said that owing to the delayed disbursement, county governments had not paid salaries since March.
“Development expenditure absorption rate and Counties operating on commercial loans which are expensive is leading to a big percentage of equitable share going towards the payment of interest rates,” argued Muriithi.
He added: “It is important to note that these amounts are the normal monthly allocation to county governments to facilitate delivery of services to the citizen.”
In January, the County governments threatened to shut down by June 24, 2021 if the National Treasury failed to disburse Sh102.6 billion owed to them.