Gov’t shaves off Ksh.23.7B from supplier pending bills


Gov't shaves off Ksh.23.7B from supplier pending bills
A person holds up a wad of new Kenyan currency notes in Ksh.1,000 denomination. Photo: File

In Summary

  • Arrears by the Government to suppliers stood at Ksh.322.5 billion at the end of 2020 declining from Ksh.346.2 billion in September last year.
  • From the balance, Ksh.274.3 billion or 85.1 per cent if the bills is owned by State Corporations while the balance of Ksh.48.2 billion is owed by ministries, State departments and other government agencies.
  • The clearance of the arrears has seen impetus from new disbursements from the exchequer to facilitate the cut back in the bills.

The National Government trimmed its outstanding bills to suppliers for the first time in more than one year between October and December with the pending arrears falling by Ksh.23.7 billion in the period.

The fall in pending bills has been revealed by new Treasury data covered in the 2020/21 second quarterly economic budget review report published this week.

Arrears by the Government to suppliers stood at Ksh.322.5 billion at the end of 2020 declining from Ksh.346.2 billion in September last year.

From the balance, Ksh.274.3 billion or 85.1 per cent if the bills is owned by State Corporations while the balance of Ksh.48.2 billion is owed by ministries, State departments and other government agencies.

The highest percentage of State Corporation pending bills at 63.1 per cent is owed to contractor/projects supplied.

The cool down in pending bills has been achieved against the backdrop of falling government revenues which caved in under economic disruptions arising from the COVID-19 pandemic.

In contrast, pending bills had bloated by more than five times rising from just Ksh.64.7 billion in June 2019 to Ksh.334.2 billion a year later.

The growth in pending bills has however been against the prioritization of clearing the arrears by the National Treasury which had on occasions threatened to pull the plug in disbursements to entities contravening the payment orders.

The clearance of the arrears has nevertheless seen impetus from new disbursements from the exchequer to facilitate the cut back in the bills.

Under the 2020/21 budget for instance, Treasury put aside Ksh.13.1 billion for the clearance of pending bills and a further Ksh.10 billion for the settling of outstanding VAT refunds under the economic stimulus program (ESP).

“The national government policy of clearance of pending bills is still in force. All MDAs are therefore expected to continue with prioritization of payment of the pending bills by settling them as a first charge in the FY 2020/21 budget,” stated the National Treasury.

On their part, Counties outstanding eligible pending bills stand at Ksh.12.2 billion as per a November 2020 Report by the Controller of Budget (COB).

The National Treasury has insisted its disbursement of adequate resources to fast track the clearance of the arrears by the devolved units.

As of February 1, 2021, the exchequer says it had released Ksh.147.9 billion and Ksh.13 billion to Counties from the equitable share kitty and conditional grants respectively.

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Story By Kepha Muiruri
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