This archive report was first published on 13 June 2020.
As the Government moves to clear billions of shillings in payments owed to the private sector, National Treasury Cabinet Secretary Ukur Yatani has announced that the Government has availed Sh33 billion to settle verified pending bills.
According to Yatani, the funds will be used to settle bills owed to businesses, with the aim of enhancing the liquidity of enterprises. He also proposed to fast-track payment of outstanding verified VAT refund claims and pending bills owed to businesses by allocating Sh10 billion.
Yatani's announcement comes as the Government faces a massive gap in its Sh2.7 trillion budget, with an audit by the Auditor General in 2018 revealing that the State and counties owe suppliers more than Sh225 billion.
Counties are said to owe the private sector over Sh100 billion, including payments to the Kenya Medical Supplies Agency, electricity, and water payments among others. Last year, Treasury released Sh50 billion to counties to pay pending bills and threatened to freeze disbursements to 15 counties that had failed to honour the deal.
However, the move was thwarted by Parliament. The 15 counties included Narok, Machakos, Nairobi, Vihiga, Isiolo, and Tana River. Yatani says Sh36.7 billion - representing 71.5 per cent of the verified eligible bills have been settled by counties as of May 2020.
