Economy
The Treasury is considering a mini-budget to clear Sh641 billion in outstanding bonds
Friday 02 June 2023
The National Treasury building in Nairobi in this photo taken on March 15, 2023. Photo | Denis Onsongo | NMG
The Treasury will submit a memorandum to Cabinet next week outlining its plans to liquidate the Sh641 billion bonds that the government owes to contractors and suppliers.
Principal Treasurer Chris Kipto told the National Assembly Budget and Appropriations Committee (BAC) that government companies owed suppliers and contractors Sh407 billion, provincial governments Sh160 billion and ministries, departments and agencies Sh18.3 billion.
He said the cabinet is expected to approve the formation of a multi-agency team to review the huge pending bills and draw up a debt-clearing budget by September this year.
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The multi-agency team will consist of officials from the Treasury, the Auditor General, the Ministry of Roads, Public Works and Housing, the Public Procurement Regulatory Authority (PPRA) and the Ethics and Anti-Corruption Authority (EACC).
The Pending Bills team will also draw memberships from the Law Society of Kenya (LSK), Institution of Engineers Kenya (IEK) and Institute of Chartered Certified Accountants Kenya (ICPAK).
The Cabinet memorandum will be submitted to the Council of Ministers next week. By September, we need to conduct a review of all outstanding invoices and provide a budget to clear all payments due to suppliers and contractors,” said Dr. Kiptu.
He has appeared before the BAC chaired by MP Kiharu Ndindi Nyoro to answer questions that have arisen during the audit of the 2023/24 budget estimates.
Many ministries, counties and government companies have huge outstanding bills, Mr. Neuro said.
“Pending bills increase when the Constitution and the Public Financial Management Act require that pending bills constitute the first charge on the budget of the relevant government agency in the subsequent fiscal year,” said Mr. Neuro.
Dr Kipto said the Treasury will create a supplemental budget to clear all outstanding bills that will be determined to be payable.
“After settlement of all outstanding bills, the outstanding bills that will arise in the fiscal year 2023/24 will constitute the first charges after next June. We will be very strict as the National Treasury for those entities that do not clear outstanding bills in the fiscal year in which they arise,” said Dr. Kipto.
President William Ruto last month accused his predecessor’s administration of hiding more than Sh200 billion in bills pending from the current budget.
“When we got to the office we found that they had not taken into account about Sh130 billion in outstanding bills and nearly Sh90 billion that was supposed to be given to the counties,” said Dr. Ruto.
At least 160 government companies have accumulated at least Sh408 billion in outstanding bills, of which Sh166.99 billion is due to contractors and Sh115.7 billion is owed to suppliers as of December last year.
Parliament in February opened investigations into allegations of diverting payments intended for suppliers who are accused of mounting outstanding bills of Sh646.8 billion in December last year.
Comptroller of the Budget (CoB) Margaret Nyakangu told the County Commission on Public Investments and Special Funds (CPISF) that shifting payments from eligible beneficiaries to other suppliers not on the payment schedules has made the headache of outstanding bills worse.
“Some of the main causes of huge outstanding bills are the diversion of payments from legitimate beneficiaries to others who are not on the list I authorize for payment,” Dr Nyakangu told the committee.
She told the committee that in some cases individuals paying suppliers at both the governmental and quasi-governmental levels removed transactions they felt did not serve their interests and left them as outstanding invoices.
She blamed a lack of automation for her office to have “full visibility” of deals once withdrawals from the Treasury were approved by the board.
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The CoB does not have real-time access to the accounts, a loophole that counties are exploiting to make discriminatory payments to contractors along with filing bogus claims.
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