The Meru County Treasury has proposed austerity measures to enable the devolved unit clear pending bills, amounting to over Sh1.3 billion, in the next two years.
County departments that have accumulated huge pending bills will be the biggest losers as they will be forced to scale down on both recurrent and development spending.
According to the draft Medium term county debt management strategy paper for 2024 presented to the county assembly by Finance executive member Ibrahim Mutwiri, stern action was needed to end accumulation of pending bills in the future.
As at July 2023, the county had accumulated pending bills of Sh1.3 billion including Sh155.3 million in recurrent bills, Sh552.2 million for development.
The county also owes more than Sh650 million, a bill that is still accumulating interest, to an hotelier who was evicted from Meru National Park.
Meru County is also yet to pay about Sh7.4 million incurred by the defunct local authorities more than 11 years after devolution.
The recurrent and development pending bills stood at Sh648.8 million in December 2023.
“Recurrent pending bills arising from all departments will be cleared as a first charge in the succeeding year’s budget…departments that have accumulated huge recurrent bills will face liquidity challenges and implementation of some of the sector’s programmes may be compromised…” the finance department proposes.
As a result of the stringent budgeting measures, the county government intends to pay Sh331 million in pending bills this financial year while Sh433.9 million will be paid in 2024/2025 financial year.
Another Sh592 million will be paid in the 2025/2026 financial year.
In the 2022/2023 financial year, the Governor Kawira Mwangaza administration paid pending bills amounting to Sh397 million.
The finance executive cites unrealistic revenue projections, late procurement and fluctuating revenue for high pending bills every financial year.
“One of the first steps in addressing a persistent arrears problem is to strengthen the realism of the annual budget…Going forward, the local revenue projections will be based on actual collections from the previous year…”the debt management strategy states.
The county also intends to adopt debt restructuring and rescheduling as well as establishment of a county debt management committee to improve cash flow management.
