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Sh66bn unpaid salaries, health insurance blight State pending bills clearance
Controller of Budget Margaret Nyakang’o Margaret Nyakang’o appears before the National Assembly Finance Committee at Bunge Tower, Nairobi, May 14, 2025.
State corporations failed to pay Sh26.8 billion in salaries and remit Sh39 billion in health insurance contributions between July and September 2025, undoing the progress made in settling pending bills.
New details show that unpaid salaries by the entities grew from Sh10.5 billion to Sh37.3 billion, while their unremitted health insurance contributions rose from Sh125 million to Sh39 billion during the three months.
The rise in the unpaid dues was one of the main reasons why the national government’s pending bills rose by about Sh600 million during the July-September 2025 quarter, despite huge settlements in other areas, the Controller of Budget (CoB) has revealed.
CoB Margaret Nyakang’o budget report for the period notes that overall pending bills for the national government rose from Sh524.8 billion in June to Sh525.4 billion in September.
“This comprised Sh406.49 billion (77 percent) for State corporations and Sh118.94 billion (23 percent) for MDAs (ministries, departments and agencies),” Dr Nyakang’o said.
A review of the report shows that since June 2025, when the 2024/25 fiscal year ended, overall State corporations’ pending bills rose by Sh2.2 billion.
While huge payments were made towards pending bills owed to contractors and unremitted pensions, accumulation of new unpaid bills offset these gains, an analysis of the COB reports shows.
For instance, the State corporations remitted Sh32.1 billion worth of pension arrears as of June, lowering the unremitted pension burden by 92.5 percent to Sh2.6 billion in September.
The State agencies also reduced debt owed to contractors by Sh15.2 billion during the three months, bringing the burden down to Sh195.8 billion by the end of September.
However, the payment of Sh47.3 billion worth of pending bills during the three months was neutralised by an accumulation of new arrears, mainly in the pay-as-you-earn (PAYE) taxes, Sacco and National Social Security Fund (NSSF) contributions.
PAYE arrears increased from Sh23.4 billion to Sh25 billion, unremitted Sacco contributions went up by Sh8.6 billion to Sh10.9 billion, and unremitted NSSF contributions increased by 40 percent to Sh898.7 million.
Overall, State corporations had pending bills totalling Sh406.5 billion in September, while MDAs had Sh118.9 billion.
The CoB reported that MDAs’ pending bills dropped from Sh120.5 billion as of June 2025.
“MDAs’ Trade Payables (Pending Bills) comprised Sh76.34 billion (64 percent) for recurrent expenditure and Sh42.6 billion (36 percent) for development expenditure,” the CoB said.
The office notes that MDAs’ pending bills include payments due to contractors/projects, suppliers, unremitted statutory and other deductions and pension arrears for the Local Authorities Pension Trust.
The Treasury indicated that the arrears as of September did not include bills under litigation, noting that they are being handled by the Attorney-General.
“The highest percentage was for contractors/projects (Sh195.85 billion), at 37 percent, followed by National Hospital Insurance Fund (Sh39.6 billion), at eight percent, and personnel emoluments arrears (Sh37.35 billion), at seven percent,” the report says.
