On 2018-11-21, the National Treasury said ministries, departments and agencies must clear pending bills before asking for more services from local suppliers and contractors. The directive came as the government grappled with unpaid dues, rising borrowing and a widening debt burden.
The quarterly economic report put outstanding bills for the 2017/18 fiscal year at Sh29.3 billion. Treasury said the administration was worried about the pace of settlement and had made payment of pending bills a priority in the 2018/19 financial year budget.
“The government has prioritized clearance of all the pending bills. Ministries, departments and agencies have been directed to settle pending bills as a first charge in the 2018/19 financial year budget,” the report stated.
The same report showed that Ministries, Departments and Agencies spent Sh194.3 billion against a target of Sh268.2 billion on pension, salaries and interests. Development spending also came in below target, with Sh68.1 billion recorded against Sh169.3 billion.
Spending by MDAs over a three-month period dropped from Sh437.6 billion to Sh262.4 billion, a 60 percent decline from September 2018.
The pressure on public finances was being compounded by domestic and external borrowing. Central Bank of Kenya data showed that external borrowing had eased after the country raised Sh200 billion through a Eurobond in February, even as domestic borrowing remained elevated.
In August, ICT Cabinet Secretary Joe Mucheru said he would not pay Sh2.5 billion owed to media houses through the Government Advertising Agency, arguing that Treasury had not released the money.
Henry Rotich’s report projected that Kenya’s debt burden would reach Sh5.6 trillion by June the following year. It said national debt stood at Sh5.1 trillion as at June 2018, split between Sh2.5 trillion in domestic debt and Sh2.6 trillion in foreign debt.
President Uhuru Kenyatta cited a Sh67.5 billion funding gap in September when he rejected the Finance Bill 2018. Treasury also projected that Kenya’s public debt would hit Sh7 trillion by the time Uhuru Kenyatta left office.
