PS says the taskforce led by former Auditor General Edward Ouko has recommended payment of Sh229 billion.

This is out of a verification exercise of unpaid bills worth Sh500 billion.

National Treasury Principal Secretary Dr Chris Kiptoo has said the payment for Sh80 billion worth of pending bills owed to road contractors by the State is ongoing.

This is even as he revealed plans to clear verified debts owed to service providers before migration to the accrual accounting system.

The PS, who was addressing concerns by the private sector at a roundtable held in Nairobi yesterday, said the taskforce led by former Auditor General Edward Ouko has recommended payment of Sh229 billion out of a verification exercise of pending bills worth Sh500 billion.

This represents 75 per cent of the total pending bills.

However, the team will be submitting another report to the National Treasury about the remainder 25 per cent of the bills after the end of their retreat on Wednesday.

“So far, by the time they submitted the last report, which we have used in this budget, they had done 75 per cent of verification. But they have been on a retreat which they finished yesterday, and we are expecting a report from them to see how much more they will add,” he said.

He said that of the Sh229 billion recommended for payment, Sh80 billion is for the road sector. “Already the road sector has started getting paid those amounts,” he confirmed.

He said the rest of the amount, Sh149 billion, has been factored into the budget. “Once the Parliament approves, we will be able to settle from July the first amounts of pending bills,” said the PS.

Dr Kiptoo said for the balance, which he is not sure how much it would be, the government still plans to clear almost immediately because it is moving away from the cash basis to accrual accounting from July 1.

“And we wanted, when we are moving, our history to be clear that any pending bills are cleared. And there are benefits to it. Many companies have suffered from a lack of payments; they took loans, some of those loans are not performing, so when we pay, non-performing loans will decline, and businesses will begin to resume,” said the PS.

He added: “We can already see in the construction sector. They have been paid and they are already at work.”

While addressing the private sector under the ambit of the Kenya Private Sector Alliance (Kepsa), Dr Kiptoo, who was accompanied by his investments counterpart Abubakar Hassan, addressed some while pledging to look into other concerns over the Finance Bill, 2025.

The issue of Value-Added Tax (VAT) refunds was thorny in the meeting as the business community singled it out as one of the contributing factors to cash flow issues among businesses, apart from pending bills.

The government in the Finance Bill, 2025, has proposed moving some goods from zero-rated to exempt in a bid to reduce VAT refund claims by businesses.

“If the policy is to move from zero-rated to VAT exempt, then let people know that prices will go up,” said Bidco Africa Board Chair Vimal Shah, who cautioned against cushioning other products such as milk, as it has always been a tradition by the National Treasury.

“Do it everywhere. Consumers will pay for it. You can’t have two policies. You have to be clear that this is what we are going for,” he added.

Mr Shah said the issue of tax refunds can be resolved, saying it is the Kenya Revenue Authority (KRA) that is paying out everything to the National Treasury, only to later claim they do not get enough allocation to pay refunds.

 He said KRA should vet, check, and verify those claims, net off what, according to the verified refund claims, before paying the rest to National Treasury. “And let’s digitise and computerise it. It is not rocket science,” he added.

Mr Hassan concurred that pending bills and VAT refunds have been a pain point among businesses, even as he promised the government’s interventions to address matters to do with illicit trade, cost of energy and cost of capital.

“As far as VAT refunds are concerned, we have put in the Finance Act, 2023, that anyone who has VAT refunds and the government has not paid for six months, can offset in the future tax liabilities.

“But we have people who wanted something more, and I think the Tax Laws (Amendment), 2024, we have allowed them to ask for reliefs,” said the PS.

Kepsa Chief Executive Carole Kariuki explained that the basis of the engagement was to avoid a repeat of 2024 scenario that saw Gen Z allied protests bringing the economy to a standstill due to some of the proposals contained in the Finance Bill 2024 that did not see the light of day.

She said while some of the issues raised in the meeting are not directly linked to KRA, the association will continue lobbying even as they hope to have a sit-down with President William Ruto end of the month.

“We are losing our competitiveness not only to the global market but also to our neighbours. We do not want a repeat of last year. Listening to some of the things the government is planning to do going forward, we will be holding them accountable,” she said.