Economy

Agencies bills fall Sh24bn on State’s supplier pay push

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National Treasury building. FILE PHOTO | NMG

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Summary

  • Pending bills by State agencies dropped by Sh23.7 billion in three months to last December, new data shows, pointing to the impact of Treasury’s push for clearance of supplier debts and statutory deductions.
  • Pending bills include payment to contractors, suppliers, unremitted statutory and other deductions as well as pension arrears.
  • The Treasury had threatened to stop releasing funds to State agencies and government ministries until they clear billions owed to their suppliers and contractors.

Pending bills by State agencies dropped by Sh23.7 billion in three months to last December, new data shows, pointing to the impact of Treasury’s push for clearance of supplier debts and statutory deductions.

Treasury reports show that arrears amounted to Sh322.5 billion at the end of December—a 6.8 per cent drop from Sh346.2 billion in September—offering partial cash flow reprieve to some government suppliers and contractors whose earnings were also hammered by Covid-19 disruptions.

Pending bills include payment to contractors, suppliers, unremitted statutory and other deductions as well as pension arrears.

The Treasury had threatened to stop releasing funds to State agencies and government ministries until they clear billions owed to their suppliers and contractors.

“The national government policy of clearance of pending bills is still in force. All ministries, departments and agencies (MDAs) are therefore, expected to continue with prioritisation of payment of the pending bills by settling them as a first charge in the FY 2020/21 budget,” said Treasury.

The latest pending bills figure is more than three-and-half times higher than the Sh89.9 billion that was owed to businesses that had done business with the State by the end of December 2019.

Treasury data shows that State corporations owed suppliers Sh274.3 billion or 85.1 per cent of the Sh322.5 billion, with Sh173.1 billion belonging to project contractors and suppliers.

MDAs were holding Sh48.2 billion, with Treasury saying that most of it relates to bills that were once in contention but awarded by courts.

A build up in pending bills is hurting cash flow in firms that are also reeling from reduced demand following the Covid-19 pandemic.