City Hall has allocated a paltry Sh3 billion towards settling its eligible pending bills in the financial year ending June 30, 2021, even as the debt soars having risen by more than Sh6 billion in only a year.
The total debt stood at Sh76.5 billion at the close of 2019, having risen by Sh6.5 billion over only a year.
The growing burden, according to the City Hall debt management strategy paper tabled before the Nairobi County Assembly on Tuesday, is due to non-remittance of statutory deductions, non-payment of suppliers and legal contractors and related penalties.
City Hall’s eligible pending bills currently stand at Sh6.56 billion despite the National Treasury directive to counties to have settled debt by last year.
Of the Sh10.67 billion of eligible pending bills as audited by the Auditor General, the county has only paid contractors and suppliers Sh1.1 billion with another Sh3 billion to the Kenya Revenue Authority in value-added tax and pay-as-you-earn arrears.
“Despite the indication that Sh5 billion has been allocated for debt repayment in the 2020/21 financial year, the overall budget projections for the coming financial year indicate that the amounts in the budget matrix for debt settlement stands at Sh3 billion,” said Budget and Appropriation Committee chairman Robert Mbatia.
He said the journey to containing the ever-increasing pending bills remains a tough one although the county intends to enhance verification of arrears, increase budgetary allocations for pending bills, comply with the law and improve the capacity of the legal services department to deal with the debt burden.
“It is clear that allocation submitted for pending bills has in real terms been reduced compared to the actual and committed expenditures for the current financial year,” he said.
The Kariobangi South MCA raised concern over the ballooning county debt.
He said the debt had been on a steady increase since the inception of devolution in 2013 when City Hall inherited about Sh36.3 billion in debt, which surged to Sh56.52 billion by 2017.
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