Counties with pending bills face funding freeze

National Treasury Cabinet Secretary Ukur Yatani. FILE PHOTO | NMG

By CONSTANT MUNDA
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Summary

• Accumulated pending bills both at national and county level has compounded cash flow challenges for businesses—especially SMEs—forcing some of them out of operation.
• The Treasury estimated arrears owed to contractors and suppliers by ministries, departments and agencies at national level at about Sh307.8 billion.

Treasury CS Ukur Yatani has asked MPs to back his plan to freeze release of cash to counties which have persistently defied presidential orders to clear verified bills owed to suppliers and contractors as a first charge.

Accumulated pending bills both at national and county level has compounded cash flow challenges for businesses—especially SMEs—forcing some of them out of operation.

The Treasury estimated arrears owed to contractors and suppliers by ministries, departments and agencies at national level at about Sh307.8 billion as at end of March 2021, while the debts at county levels also top Sh100 billion.

“I urge this House to support our efforts towards enforcing compliance in payment of all verified pending bills by County Governments by backing our proposal under Article 225 of the Constitution of Kenya to temporarily stop transfers to county governments that persistently fail to comply with the directive to clear pending bills,” the CS said.

Section 96 of the Public Finance Management Act and Article 225 of the Constitution give Mr Yatani powers to temporarily withhold cash transfers to counties that persistently breach financial commitments.

The Budget and Appropriation Committee has proposed creation of a special fund to be financed through a long-term bond to clear verified pending bills, something Mr Yatani avoided in his budget.