Rédaction Africa Links 24 with Daily Nation
Published on 2024-02-01 07:00:00
The State is set to use a mini-budget planned for next month to partially pay contractors’ dues as part of an effort to clear the over Sh630 billion worth of pending bills. This move aims to ease the cash-flow difficulties currently facing businesses.
According to National Treasury Principal Secretary Chris Kiptoo, the committee tasked with verifying the outstanding bills will present the first list of claims by mid-March. This will pave the way for the inclusion of the dues in the supplementary budget.
Businesses that provided goods or services to State agencies and ministries have been facing cash flow challenges due to non-payment of the funds. This has caused a stir within the business community.
State entities owed firms and contractors Sh631.56 billion in unpaid bills as of September last year. State Corporations held the larger share of unpaid bills at Sh509.37 billion (64.1%), while ministries, departments, and agencies were responsible for the remaining Sh121.19 billion.
In June last year, the government formed a Pending Bills Verification Committee to audit liabilities dating back to between 2005 and 2022. Dr. Kiptoo stated that the verification process is expected to be completed within one year, with the first report due in three months.
The National Treasury is expected to table the second supplementary budget for the current financial year in Parliament between next month and April. The timeline aligns with an agreement with the International Monetary Fund to have a final payment plan for pending bills in place by May.
The accumulation of unpaid bills has continued despite directives from the National Treasury for State agencies to settle these bills as a first charge in their budgets. The unpaid bills grew from Sh56.78 billion in June 2021, highlighting the impact of non-compliance with the directives.
The Kenya Association of Manufacturers has repeatedly raised concerns about the adverse impact of the accumulation of pending bills. They have warned that businesses have been forced to scale down and some have increased reliance on bank loans to fund operations.
The Controller of Budget, Agnes Nyakango, has also expressed concern about pending bills and has urged the National Treasury to expedite efforts to have State entities settle their dues.
Public entities have been given until tomorrow to present details of pending bills in their books to the verification committee, which will pave the way for their audit and subsequent payment.
Overall, the government’s efforts to clear pending bills and pay contractors’ dues are aimed at alleviating the cash flow difficulties currently facing businesses. This is a positive step that will help restore financial stability for many firms and contractors, ultimately contributing to the overall economic well-being of the country.
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