William Ruto prioritises payment of Sh504bn pending bills – Business Daily
The National Treasury building in Nairobi. PHOTO | SALATON NJAU | NMG
The new government has promised to pay the Sh504 billion pending bills passed down by the outgoing administration, in a major relief to businessmen and contractors who do business with the government.
President William Ruto said the government will work on the mounting pending bills that have forced many small and medium-sized businesses to close or face auctions.
Data from the National Treasury shows pending bills climbed to Sh504.7 billion in the financial year ended June, a 40.39 percent jump from Sh359.5 billion the previous year, making it the annual jump on record.
A large number of business people who have contracts with the government have ended up being blacklisted by credit reference bureaus after falling behind on loan repayments or defaulting.
“We shall give priority to the expeditious resolution of our pending bills so that the government can meet its obligations and facilitate better economic performance,” President Ruto said in his inauguration speech.
He said the government would work on a proposal for the suppliers to collect the money within a shorter period.
“In the coming weeks, we shall advise government creditors on the mechanism for the resolution of their outstanding payments. We are committed to ensuring that they are paid in the shortest time possible.”
The measures were among those announced by the new president as part of plans that his new government will take on including cutting the cost of fertiliser for farmers, fuel prices, high public debt, unemployment, state credit guarantee schemes and industrialisation.
The ballooning pending bills have become a major economic challenge despite his predecessor Uhuru Kenyatta in June 2019 directing that ministries and parastatals should prioritise verified arrears in the expenditure plan.
However, the Budget and Appropriations Committee of the National Assembly warned in June 2021 that the arrears had accumulated to levels which could not be settled through annual budgetary allocations.
The committee recommended that the Treasury sets up a special fund to be financed through a long-term debt to pay off verified pending bills for goods and services rendered and court awards for contract breaches, unlawful dismissals and human rights violations.
The mounting pending bills add to the country’s fiscal stress facing the new government amid a high public debt at Sh8.56 trillion as at May.