Counties

Suppliers hit as City Hall debts jump by Sh79.1 billion

city-hall

City hall, Nairobi. FILE PHOTO | NMG

City Hall’s debts owed to third parties have grown by Sh2.2 billion in nine months, with interest and penalties contributing to half of the amount.

The Auditor-General faulted the county government for failing to service its loans as well as remit statutory deductions in time as is required by law.

The debt stood at Sh79.1 billion as of September 30, 2021, having increased by about Sh2.2 billion from that of December 31, 2020, which was Sh76.9 billion.

In the three months between June-September 2021, the county’s debt ballooned by Sh1 billion despite elaborate efforts City Hall put in place to clear its pending bills.

Cumulatively, the debt has ballooned by Sh22.6 billion in the last three years with only Sh3.29 billion paid as pending bills under the Ann Kananu-led administration during the same period.

The county debts comprise arrears owed to statutory bodies, suppliers and contractors, litigation, KCB #ticker:KCB loan, contingent liabilities and loan guaranteed by the government.

Finance Executive Allan Igambi said the debt trend has been increasing since 2014 largely due to interests and penalties charged to statutory creditors.

“This perpetual increment in debt as some continue to accrue interest, pose a strain on the county’s revenue thus a major challenge in execution of its development obligation as it results in diversion of funds that would have otherwise been channelled to critical development projects,” he said.

Local Authority Pension Trust debt stands at Sh18.1 billion with a principal amount of Sh6.6 billion while penalties and interest contribute Sh11.5 billion while the Local Authorities Pension Fund debt has hit Sh22.2 billion.

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