State ministries and corporations are caught in a race against time to submit new records of outstanding debts amounting to billions of shillings accumulated over the past 16 years.
Treasury Cabinet Secretary Ukur Yatani said accounting officers must submit records by the middle of next month, even as the government moved to prioritize settlement of outstanding invoices amid widespread complaints from vendors.
“Accounting officers are requested to update the record of all outstanding invoices incurred after 2005 and report it to the National Treasury before July 12, 2021,” it said in a new circular.
This came as the Treasury directed state agencies and ministries to treat pending FY 2020/21 bills as the first charge in their 2021/22 budgets.
“Accountants should ensure that carryover payments emanating from the 2020/21 financial year are treated as a first charge against the 2021/22 financial year budget allocation before making new commitments,” Yatani said in the circular.
“Pending bills must be accommodated strictly within the budgetary provisions for the respective MDAs without seeking additional funding from the National Treasury.”
Outstanding invoices remain a major concern for vendors facing serious cash flow issues, often resulting in their property being auctioned.
Private sector providers were owed 308 billion shillings in cash at the end of March 2021.
This comprised Sh263 billion (85.4 percent) for semi-autonomous government agencies and Sh45 billion (14.6 percent) for MDA and counties.
Since 2019, the government has been trying to pass the bills through directives from President Uhuru Kenyatta, the Treasury, and even withholding county disbursements, but the matter has not been resolved.
Parliament has proposed the creation of a fund financed through a long-term bond for the payment of verified outstanding invoices verified by October this year.
The International Monetary Fund and the World Bank have forced Kenya to produce quarterly reports on how they have settled bills under the multi-million dollar loan agreements signed by the government.
“The government promised to make regular quarterly reports on pending bills covering ministries, departments and agencies (MDA), counties, semi-autonomous government agencies (SAGA) and state corporations (SC),” the IMF said after the program review. of May.
However, there are concerns about the validity of vendor claims with the fear that they could be used to pay fictitious and inflated claims without clear controls.