The State will partly use a mini-budget planned for March to pay contractors amid renewed efforts to settle the more than Sh630 billion worth of pending bills to ease cash-flow woes among businesses.
Treasury PS Chris Kiptoo said on Wednesday the committee tasked with verifying the bills will present the first list of claims by mid-March, paving the way for including the dues in the supplementary budget.
Firms that delivered goods or services to State agencies and ministries have been grappling with cash flows caused by non-payment of the cash, triggering an uproar among the business community.
State entities owed firms and contractors Sh631.56 billion as of last September, with the bigger chunk of Sh509.37 billion or 64.1 percent held by State corporations and the remaining Sh121.19 billion by ministries, departments and agencies. The government last June formed a pending bills verification committee to audit liabilities between 2005 and 2022.
“We are hoping that this (verification) will be completed within one year, but we have given them three months to give us the first report,” said Dr Kiptoo.
“The three months ends in mid-March and we expect them to finalise and part of what is verified, we will include it in the supplementary budget for March-April. The rest will be settled depending on the fiscal space that we have.”
The Treasury will table in Parliament the second supplementary budget for the current financial year between March and April.
The timelines are in line with the agreement with the International Monetary Fund to have a final payment plan for the pending bills by May.
Accumulation of the unpaid billions has gone on unabated as the State agencies continue to flout the Treasury directives.
The Public Finance Management (National Government) Regulations 2015 require State agencies to settle pending bills as a first charge in their budgets.
The bills grew from Sh56.78 billion in June 2021 highlighting the impact of non-compliance to the directives.
The lobby for businesses Kenya Association of Manufacturers has repeatedly warned of the adverse impact of the accumulation of pending bills, saying that businesses have been forced to scale down. Other firms increased reliance on bank loans to fund operations.
Controller of Budget Margaret Nyakango has also been flagging pending bills as a key concern, saying the Treasury should facilitate payments.
Public entities have up until Friday to present details on pending bills in their books to the verification committee, paving the way for their audit and subsequent payment.
