The Auditor General, Nancy Gathungu, has sent shockwaves through government corridors by announcing that pending bills, which have ballooned to Ksh156.34 billion, will be included in the country’s already staggering public debt.
Speaking to the Senate Committee on County Public Investment and Special Funds on Wednesday, September 4, Gathungu revealed her plan to count these unpaid bills as part of Kenya’s national debt, which currently exceeds Ksh10 trillion.
“Pending bills, in my next summary, I will put it as part of public debt,” Gathungu stated emphatically, sending a clear message that fiscal indiscipline will no longer be tolerated.
Why it matters: Pending bills have been a concern that has cut across government institutions, with the ramifications often costly. Some companies have stated they have been forced to take loans while waiting for government institutions and counties to release funds.
The change might force the government to clear the pending bills as a matter of urgency.
Dig deeper: The remarks by Gathungu come at a time when county governments are grappling with accusations of financial mismanagement, with Gathungu pointing the finger directly at county officers who have been deciding which creditors to pay and which to ignore.
Rejecting claims by governors that delayed exchequer releases are the root cause of mounting pending bills, Gathungu challenged the notion that county governments are helpless in the face of delayed Treasury funds.
“If delays in Treasury releases are the issue, then the total pending bills should match the amount of money that the Treasury has not released,” she argued, laying bare the inconsistencies in the counties' financial explanations.
The Auditor General’s scrutiny has exposed the staggering figures behind the counties’ financial mismanagement. As of December 31, 2023, county governments had accumulated Ksh156.34 billion in pending bills, with Nairobi County leading the pack with a staggering Ksh107 billion in debt. Kiambu and Mombasa Counties followed with Ksh5.7 billion and Ksh3.9 billion, respectively. These figures paint a grim picture of fiscal indiscipline and mismanagement at the county level.
The issue of pending bills has become a hot-button topic in government circles, with the National Assembly recently passing a motion that compels county governments to clear their debts by the end of the current financial year in June 2024.
Lawmakers have warned that failure to do so may result in the withholding of subsequent budgetary allocations, putting additional pressure on already strained county finances.
Fresh details: But Gathungu’s revelations did not stop there. She highlighted a disturbing trend where government institutions, including county governments, have resorted to borrowing from their own employees to fund operations.
“We have borrowed commercial loans, we have overdrafts, and now we are borrowing in kind,” she told the Senate Committee, describing a scenario where employees’ pension contributions and other statutory deductions are being withheld to cover operational costs.
“We are borrowing from our employees by deducting pensions and other statutory deductions and not paying them,” she asserted, describing a practice that could have far-reaching consequences for public trust in government institutions. Gathungu’s revelations point to the financial strain facing county governments and other public institutions, as they scramble to find funds to meet their obligations.
Her remarks have cast a spotlight on the broader issue of government financial management, raising questions about the sustainability of the current fiscal practices.
“People provide us with goods. They provide services, and we don’t pay,” Gathungu lamented, painting a stark picture of a government that is failing to meet its basic obligations.
The revelations will ignite a debate among state organs, with lawmakers demanding greater accountability and transparency from both the national and county governments.
