The total outstanding stock of national government pending bills fell by Sh118.3 billion in the first three months of the year, as the State began paying approved arrears.
New data from the National Treasury shows that the total pending bills fell from Sh539.9 billion at the end of December last year to Sh421.6 billion as of March 31, 2025.
The exchequer says ministries and State departments (MDAs) have been given the green light to pay down approved bills, while arrears due in the roads sector will be paid through a bond to be issued by the Kenya Roads Board (KRB).
The latest report from the pending bills verification committee indicated that it had verified Sh578 billion in arrears out of the Sh663 billion, the Treasury told the Business Daily.
Of the verified pending bills, only Sh229 billion were certified for payment, including Sh80 billion in arrears relating to the roads sector.
“About Sh80 billion of the approved bills relate to the road sector and we have started the process of settling those bills using the securitisation of the Sh7 per litre road maintenance levy,” Treasury Cabinet Secretary John Mbadi said in an interview.
“Pending bills are coming down partly because of the roads sector settlements. For the balance of Sh148 billion, we are working to make a proposal to Cabinet to settle the bills. By the time we get the approval, the committee will be done with the verification, and we can add approved pending bills to the balance to be settled.”
Mr Mbadi said that ministries and State departments have been cleared to begin paying down approved arrears, especially sensitive dockets such as the Ministry of Defence.
The stock of national government pending bills peaked at Sh630.6 billion in September 2023, before easing in subsequent quarters.
The current stock comprises recurrent bills totalling Sh162 billion and development bills amounting to Sh259.7 billion, which includes payments due to contractors/projects, suppliers, unremitted statutory deductions and pension arrears for the Local Authorities Pension Trust (Laptrust).
The largest proportion of the State Corporations pending bills are owed to contractor/projects and suppliers, while MDAs’ bills mostly consist of historical arrears.
Last month, KRB received the greenlight to issue a Sh135 billion bond, the proceeds of which will be used to settle outstanding bills in the roads sector.
Investors who buy into the bond will be compensated with collections from the Roads Maintenance Levy Fund (RMLF), which was raised from Sh18 per litre to Sh25 in July last year.
The pricing of the bond is yet to be determined, but was estimated by some Treasury officials at around 1.5 percentage points above the prevailing 91-day Treasury bill return.
The proposed bond is part of a long-standing campaign pledge by the Kenya Kwanza administration to clear the country’s pending bills headache.
In its manifesto, Kenya Kwanza indicated that it would engage a transactions advisor on the securitisation of the outstanding bills after they had been verified to remove the pressure of settlements from the annual budget allocations.
Regional development finance institution, the Trade and Development Bank (TDB) is arranging the planned KRB bond.
