The Ministry of Defence has emerged as the biggest culprit in unpaid bills, with outstanding arrears amounting to Ksh 16.7 billion as of September 30, 2024. This revelation is part of a recent report by the Controller of Budget (CoB), highlighting the pending bills crisis across state ministries, departments, and agencies.
Total pending bills for these entities now stand at Ksh 117 billion, a significant decrease from Ksh 136.5 billion recorded in the first half of the year ending June 30. Despite this reduction, the unpaid bills still represent 26% of the cumulative Ksh 516.2 billion owed by the national government to suppliers and service providers.
Breakdown of Defence Ministry’s Arrears
The Defence Ministry’s arrears primarily stem from recurrent expenditure, which accounts for Ksh 16.7 billion of the total. An additional Ksh 665 million is attributed to development-related expenses. This puts the ministry far ahead of other state bodies in terms of pending bills.
Following the Defence Ministry, the now-defunct Nairobi Metropolitan Service (NMS) ranks second with unpaid bills totaling Ksh 13.3 billion. The National Youth Service (NYS) comes third with Ksh 14.5 billion, all of which falls under recurrent expenditure.
Other notable defaulters include the State Department of Agriculture, with Ksh 9.5 billion in unpaid bills, and the National Police Service (NPS), which owes Ksh 6 billion. The State Department of Transport and Medical Services have also accumulated arrears of Ksh 6.1 billion and Ksh 5.6 billion, respectively.
Expenditure Patterns
The report provides insights into the government’s expenditure patterns during the July to September 2024 period. Total expenditure for the national government stood at Ksh 823 billion, with Ksh 717 billion allocated to recurrent expenses and Ksh 106 billion to development initiatives.
On the development front, the State Department for Roads led with Ksh 24.7 billion in spending, followed by the Economic Planning Department at Ksh 14.1 billion. Other significant spenders included the State Department of Irrigation (Ksh 4.8 billion), Crop Development (Ksh 4.5 billion), and Water and Sanitation (Ksh 4.3 billion).
Recurrent expenditure was dominated by the Teachers’ Service Commission (TSC), which spent Ksh 86 billion during the review period. The Defence Ministry followed with Ksh 40.7 billion, while the Higher Education and Research Department spent Ksh 35.5 billion. The National Police Service recorded recurrent expenditure of Ksh 29 billion.
Other notable recurrent spenders included the State Department for Basic Education (Ksh 26 billion), the National Intelligence Service (Ksh 11.2 billion), and the Medical Services Department (Ksh 10 billion).
Implications of Pending Bills
The issue of pending bills continues to be a major concern for the national government, as it affects the liquidity of suppliers and service providers who rely on timely payments to sustain their operations. While the reduction in pending bills from Ksh 136.5 billion to Ksh 117 billion signals some progress, the remaining arrears underscore the need for better fiscal management.
Recurrent expenditure remains a key driver of pending bills, accounting for Ksh 85.7 billion of the total backlog. Development expenditure, meanwhile, contributes Ksh 31.9 billion. This imbalance highlights the government’s prioritization of immediate operational needs over long-term development projects.
Moving Forward
The Controller of Budget has called for stricter budgetary controls and timely disbursement of funds to mitigate the accumulation of pending bills. With the Ministry of Defence at the forefront of this challenge, the need for reforms in financial management across state ministries and agencies has never been more urgent.
As Kenya strives to balance its fiscal obligations, addressing the root causes of unpaid bills will be essential in ensuring sustainable economic growth and the credibility of public financial management.
