County governments have been urged to fast track payment of suppliers and contractors to reduce the country’s non-performing loans.
Central Bank of Kenya Governor Dr Patrick Njoroge says pending bills have reduced cash flow in the country’s economy crippling key operations in both the national and county governments.
During a roundtable meeting between President Uhuru Kenyatta and Kenya Private Sector Alliance representatives in June this year, the President agreed to the fast-track payment of all pending bills, proposing suppliers to be paid within 60 days after delivery with the proposal to be anchored in the financial bill.
However, counties are still holding out on suppliers and contractors.
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The CBK Governor Dr Njoroge warned that the non-performing loans might cripple the SME and financial sectors due to an increase in nonperforming loans.
According to data from the office of Controller of Budget, by the end of 2017/2018 financial year, all 47 counties had an accumulated pending bills worth 108.41 billion shillings up from 35.84 billion shillings the previous year.
It remains to be seen if private sector proposal for an introduction of interest on all pending bills and hefty fines for non-compliance will be adopted in the Finance Bill.
The Finance Bill also proposes action against government officials diverting money meant to pay suppliers.