The National Treasury will stop cash disbursements to counties that have not paid suppliers for goods and services already delivered.
Acting Treasury Cabinet Secretary Ukur Yatani yesterday said 15 counties have until December 1 to clear pending bills or risk losing out on cash transfers from the national government.
“The National Treasury released Sh65 billion to county governments by June 30, 2019, which was the final disbursement on the understanding that this will be utilised to pay off pending bills,” said Mr Yatani during a briefing at the Treasury.
The CS said that only 12 counties had complied with the directive to settle the pending bills while 20 counties were yet to fully comply.
“However, 15 county governments have not made any efforts to clear their pending bills in the 2019/2020 financial year. Their reported eligible pending bills have remained static between July 1 and October 31, 2019 and are sadly holding a huge proportion of the pending bills," he said.
The 15 counties are Narok, Machakos, Nairobi, Vihiga, Isiolo, Tana River, Migori, Tharaka-Nithi, Bomet, Kirinyaga, Nandi, Mombasa, Kiambu, Garissa and Baringo.
The move to halt cash transfers is likely to lead to a confrontation between the government and counties, especially after the devolved units recently accused Treasury of delaying disbursements and forcing governors to rely on overdrafts to fund their operations.
Yatani also said the national government owes Sh94 billion in pending bills, which ministries, State departments and parastatals will be required to pay up.
“As per returns submitted by the national government MDAs (ministries, departments and agencies), pending bills as at the end of the 2018/2019 financial year amounted to Sh96.1 billion.
“These should form a first charge on the 2019/2020 budgetary allocation before entering into any new commitments. There should not be discretion on this directive given the need to enforce strict financial compliance,” said Yatani.
According to an audit conducted by the Treasury last year, the entire stock of pending bills that both the national and county governments owe suppliers stands at Sh225 billion.
Out of this, Sh51 billion owed by counties has been approved for payment and another Sh37 billion is pending review.
The national government owes Sh137 billion, including Sh42 billion in historical bills that have accumulated over the years.