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State pending bills drop by Sh57bn in three months
Road construction in Bomet East on September 16, 2025. Kenya’s payment of Sh56.9 billion in pending bills has revived road projects and lifted construction growth.
Photo credit: Vitalis Kimutai | Nation Media Group
National government pending bills fell by Sh56.9 billion in three months to December as the State accelerated efforts to settle the arrears, especially road contractor bills.
New data from the National Treasury shows the stock of pending bills owed by the State fell to Sh468.5 billion at the end of December 2025 from Sh525.4 billion in September 2025.
During the three months period, the National Treasury accelerated the clearance of road sector pending bills, taking on commercial bank loans to clear the arrears, resulting in the resumption of road works.
The current stock of national government pending bills remains significant, despite the partial settlement, at an equivalent 2.88 percent of GDP.
“The total outstanding national government pending bills as of 31 December 2025 amounted to Sh468.5 billion,” the National Treasury stated in a report.
“These comprise of Sh368.9 billion for the State corporations and Sh99.6 billion for ministries, State departments and other government entities respectively.”
State Corporations pending bills cover payments due to contractors, suppliers, unremitted statutory/other deductions and pension arrears for local authorities’ pension trusts.
The persistence of large pending bills has been despite a national government policy to clear the debt rapidly.
Ministries and State departments are required to prioritise the payment of pending bills, settling them as a first charge in the current 2025/26 financial year.
Interventions to clear the arrears have so far been concentrated on payments to road sector contractors which has allowed the resumption of key projects, lifting output for the construction sector.
The national government has sourced commercial bank loans from lenders including the Trade and Development Bank (TDB), KCB Bank Kenya, Absa Bank Kenya and UBA Kenya Bank.
The four lenders have provided financing to clear the arrears ahead of the issuance of the roads bond programme, with the loans provided serving as bridge facilities.
Earlier this week, Deputy President Kithure Kindiki said road sector arrears worth Sh177 billion dating back to 2020 had been settled from the commercial bank loans, unfreezing stalled projects amounting to 6,000 kilometres of road.
Last month, the Kenya Roads Board (KRB) which is tasked with overseeing the roads bond programme said it would prefer issuing the debt notes in tranches to investment firms as opposed to the open markets.
Investors in the Sh175 billion bond programme are to be paid off using partial collections under the Road Maintenance Levy Fund (RMLF) with the government securitising Sh7 of the Sh25 raised from every sale of a litre of petrol or diesel.
"We are going to the markets next month (February) and this bond will be issued in tranches with a preference to investment clubs. The proceeds will be fully used to pay the loans that we have taken to settle the pending bills,” KRB Acting Director General Martin Agumbi said in a previous interview.
The settlements to road contractors have revitalised the construction sector, which expanded by 5.7 percent in the quarter ended June 2025, reversing a contraction of 3.7 percent in the same quarter of 2024, as per Kenya National Bureau of Statistics (KNBS) data.
Cement consumption rose 23.9 percent to 2.4 million tonnes in the review period while imports of bitumen, iron and steel also increased.
