The national government’s outstanding pending bills rose by Sh29.4 billion in the three months to June 2024 despite the Kenya Kwanza administration’s talk of eliminating the sticky arrears to suppliers, including contractors.
According to the latest disclosures by the National Treasury, the stock of national government pending bills hit Sh516.3 billion in June from Sh486.9 billion in March.
The rise comes amid the continuing probe into the substance of the arrears by the pending bills verification committee, instituted in June 2023 to audit liabilities falling between 2005 and 2022.
The verification committee tabled its first report in May this year confirming that the government owed contractors and suppliers Sh110 billion from an earlier estimate of Sh641 billion.
The findings did not however fault other arrears with the committee noting at the time that its pending bills verification process was still ongoing.
The lack of budgetary allocations towards the payment of pending bills by the government could derail State's objective to reduce the arrears which continue to pile up.
The National Treasury has been banking on a shift to accrual basis accounting from the cash basis to significantly reduce the occurrence of pending bills. Accrual accounting records revenue and expenses when transactions occur but before money is received or dispensed.
Cash basis on the other hand records revenue and expenses when cash related to those transactions is actually received or dispensed.
“Currently, the national government MDAs and county governments do not recognise pending bills as payables in their balance sheet since they are on the cash basis of accounting. This means that all pending bills are maintained outside of the integrated financial management information system thus making them difficult to track and verify,” noted Treasury Principal Secretary Chris Kiptoo.
As at June 2024, the outstanding pending bills as reported by the exchequer comprised Sh379.8 billion as arrears owed by State Corporations and Sh136.5 billion for ministries, State departments and other government entities.
“The State corporations pending bills include payments to contractors/projects, suppliers, unremitted statutory and other deductions, pension arrears for local authorities pension trust and others. The highest percentage of the corporations pending bills belong to contractor/developer projects and suppliers. Ministries and State departments and other government entities pending bills constitute mainly of the historical ones,” the National Treasury said.
The exchequer says it is currently developing a comprehensive strategy to clear all the stock of verified pending bills of the national government over the medium term.
The pending bills verification committee is meanwhile receiving submissions on pending bills and claims from the general public up to August 30.
The committee has until October this year to verify all pending bill claims and submit a report detailing necessary actions required to retire the arrears.
The committee led by former Auditor General Dr. Edward Ouko is further expected to develop reforms or measures that will ensure future accumulation of pending bills is avoided.