Pending bills owed by state agencies killing MSMES, Controller of Budget warn
The Controller of Budget (CoB) Margaret Nyakang’o has raised alarm over the mounting pending bills owed by State Corporations and Ministries, Departments, and Agencies (MDAs), warning that the trend is choking cash flow in the economy, especially for Small and Medium Enterprises (SMEs).
Nyakang’o outlined the negative repercussions of these unpaid bills, including liquidity challenges, potential business closures, job losses, and increased government expenditure in the form of penalties, interest charges, and eroding trust from the private sector.
“As of 30 June 2025, pending bills for the National Government stood at Sh524.84 billion, up from Kshs. 516.27 billion in the previous year. Of this, Sh404.33 billion (77 per cent) was owed by State Corporations, mainly contractor payments, supplier arrears, statutory deductions, and pension obligations, while Sh120.51 billion (23 per cent) was owed by MDAs, largely historical bills under recurrent and development expenditures,” said Dr. Nyakang’o.
She emphasised the urgency of addressing this issue, recommending swift action by the National Treasury.
“I would recommend that the National Treasury should fast-track the verification and settlement of eligible pending bills to ease pressure on the private sector and restore confidence in government payment systems,” she added.
The CoB made the remarks while appearing before the Budget and Appropriations Committee, chaired by Alego Usonga MP Samuel Atandi, during the presentation of the Budget Implementation Review Report for the Financial Year 2024/2025.
In addition, the CoB called for the adoption of sound planning and expenditure management practices to ensure that essential services are prioritized and adequately funded during both the formulation and execution of the national budget.
This, she noted, would reduce overreliance on Article 223 of the Constitution, which allows the Cabinet Secretary for the National Treasury to authorize withdrawals to support ongoing programmes without prior approval.
“In the FY 2024/25, a total of Sh83.96 billion in withdrawals were authorized by the CS National Treasury under Article 223, of which the Controller of Budget authorized Sh66.54 billion,” she observed.
She pointed out that such actions are in violation of Paragraph 40(4) of the Public Finance Management (PFM) Regulations, 2015, and underscore weaknesses in budget planning and execution.
