State cuts pending bills to suppliers and contractors

Treasury CS Ukur Yatani. [Wilberforce Okwiri, Standard]

The government’s arrears to contractors and suppliers dropped by Sh33.2 billion in three months to March, marking the first quarterly fall in pending bills in the financial year ending June 2022.

Treasury data shows the stock of pending bills eased from December’s Sh467.7 billion to Sh434.5 billion at the end of March, cutting the trend where the arrears had swelled for three consecutive quarters.

The value of pending bills had increased by Sh159.9 billion in nine months to December last year, meaning that the latest drop may not do much in offering reprieve to contractors and suppliers.

Pending bills stood at Sh307.8 billion in March last year and have been rising over time to hit Sh423.2 billion in September, before swelling to Sh467.7 billion in December.

State corporations lead with pending bills amounting to Sh385.6 billion, which was a Sh28.6 billion fall from Sh414.2 billion last December.

Treasury said the State corporations’ pending bills - outstanding and undisputed payments due for more than 90 days - included unremitted statutory deductions. 

Ministries, State departments and other government entities saw their unpaid bills to suppliers and contractors ease by Sh4.6 billion to Sh48.9 billion. 

Treasury says 59.1 per cent, or Sh227.9 billion, of the Sh434.5 billion State corporations’ pending bills belong to contractors of projects and suppliers of goods and services.

Pending bills have continued to worry businesses even after President Uhuru Kenyatta issued a directive in 2019 that ministries, departments and agencies treat verified arrears as the first charge in their expenditure plans.

Treasury followed it up with a policy the same year, which it confirms is still in force. The rising pending bills, therefore, mean the directive is not being followed. “The national government policy on clearance of pending bills continues to be in force,” says Treasury.

“All MDAs are, therefore, expected to continue with prioritisation of payment of the pending bills.”