Controller of Budget now warns that pending bills hurting country's economy

It is now emerging that the country’s economy has been ravaged by pending bills and the ballooning public debt.

In a forecast report, the Controller of Budget has warned that pending bills have crippled businesses, and reduced government revenue streams in delayed tax submissions whose net effect is a struggling economy in dire need of cash flow to service its growing public debt.

The report for the financial year ending June 2022 indicates the government owed contractors and suppliers a whooping Ksh.49.24 billion.

The state department of public services –(national youth services) is the biggest culprit holding back Ksh.14.58 billion from its suppliers, followed by the state department for crop development under the Ministry of Agriculture which is yet to pay up Ksh.10 billion.

The Ministry of Transport has a pending bill of Ksh.6 billion, while the Nairobi Metropolitan Services (NMS) under the office of the president has not paid over Ksh.3 billion despite being wound up at the end of President Uhuru Kenyatta’s administration.

The Defence Ministry has a balance of Ksh.1.76 billion, others include state department for regional and northern corridor development, the state department for wildlife and the electoral commission that are yet to reimburse businesses that have supplied them.

The controller of budget has warned that the trend is not only crippling business entities in the country but also the government due to delayed tax submissions. And as such to inject cash flow back into the economy, the controller of budget has recommended for settling of the pending bills as the first charge in the 2022/2023 financial year.

President William Ruto in his inaugural speech took cognisance of the pending bill burden and committed to settling the bills to give businesses a lifeline.

Meanwhile, the country’s public debt stands at Ksh.8.45 trillion with the bulk of it being external debt.

The ballooned public debt over the years is attributed to the plugging of the country’s budget deficit. The country has been borrowing, moreso, foreign debt to finance its financial obligations due to a shortfall in revenue collection.

In the financial year, 2021/2022 the controller of budget indicates the country allocated Ksh.1.17 trillion to repay its debt which has been compounded more by the interest rates accrued. The controller of budget has warned the government to go slow on borrowing and only do it for development expenditure but at a minimum cost to keep the debt sustainable

During the 2021/2022 Financial Year, the controller of budget report indicates a dip in development budgetary allocation in contrast to a sharp spike in the recurrent budget. While the development budget was capped at Ksh.688.75 billion,  the government spent Ksh.2.77 trillion on recurrent expenditure.

The report attributed the spike in recurrent expenditure to the offsetting of the country’s public debt.