NAIROBI, Kenya Jan 20 – Ministries, State departments, semi-autonomous agencies, and parastatals might be obligated to open specific bank accounts for approved projects to cure the perennial issue of pending bills.
Rongo Member of Parliament Paul Abour has sponsored proposal amendments to the Public Finance Management Act (PFMA) which are currently being considered for approval by National Assembly Speaker Moses Wetangula.
In the proposals, the Rongo MP is seeking the amendment of section 17 of the PFMA act to have ‘all funds disbursed by the National Treasury to Ministries, State departments, semi-autonomous agencies, and parastatals for approved projects in the annual budget deposited in designated project specific bank accounts’.
“These accounts shall be opened and maintained solely for the management and execution of the approved projects to which the funds are allocated,” Abour stated.
The second time lawmaker argued that the proposals are timely following the alarming trend of state institutions diverting budgeted project funds to fund other demands within the national government.
Abour highlighted that the situation has led to the collapse of businesses owned by contractors and suppliers due to unpaid dues by the national government and the devolved units.
State institutions have previously been warned of diverting public funds to finance non-priority projects with contractors and suppliers forced to wait for months on end for their payments.
“Once the National Treasury disburse the funds its put in a pool of funds by the procuring entity. Once the contractor or supplier concludes the project or the assignment they will be surprised the money is not there and automatically it becomes a pending bill,” the Rongo MP said.
Abour also seeks to reinforce the amendment by introducing stringent penalties for accounting officers who fail to comply with the requirements by proposing a five-year jail term or a penalty equivalent to 150 percent of the total amount misused.
The legislator intends to introduce amendments to section 197 of the PFMA act to also issue penalties to any banks found to have facilitated the unauthorized withdrawal or transfer of funds from project-specific accounts.
“Any AIE holder or accounting officer found to have diverted funds from project specific bank accounts to unauthorized uses shall face the immediate suspension and potential dismissal from public service, subject to investigation,” Abour averred.
Pending Bills
The latest Controller of Budget (CoB) data shows that the country’s debt to various entities and individuals stood at Sh622.82 billion as of June 30, 2023.
The arrears are distributed across various entities, including state corporations, which owe suppliers Sh379.81 billion, followed by ministries, departments, and agencies (Sh136.45 billion).
In a similar period last year, corporations were owed Sh443.6 billion by suppliers and contractors, whereas MDAs owed Sh179.22 billion.
“MDAs’ pending bills are mainly historical pending bills comprising Kshs.100.73 billion (74 per cent) for recurrent expenditure and Kshs.35.72 billion (26 per cent) for development expenditure,” the CoB said in the report.
“In FY 2023/24, MDAs pending bills declined by Kshs.42.18 billion, comprising Kshs.30.81 billion for recurrent and Kshs.11.37 billion for development expenditure,” it continued.
“The State Corporations’ pending bills include payments due to contractors/projects, suppliers, unremitted statutory and other deductions, and pension arrears for Local Authorities Pension Trust. The highest percentage of the State Corporations’ pending bills (Kshs.235.00 billion as of 30th June 2024) was for Contractors/Projects at 62 per cent followed by Pension Arears at 13 per cent.”
In June2023, the Cabinet approved a Pending Bills Verification Committee to audit the government’s uncleared bills between June 2005 and 2022.
