Counties should heed advice and settle bills
Tuesday, January 26th, 2021
The much-publicised release of Sh24 billion to the counties last week was a breath of fresh air at a time when the economy is hurting from lack of funds.
While releasing the money, National Treasury Cabinet Secretary Ukur Yatani urged the devolved units to spend some of the money in settling pending bills, if only to excite the economy on the back of Covid-19 pandemic shocks.
If counties will heed to this call, in one fell swoop, billions of shillings would trickle down to suppliers in the counties and ease the suffering of traders.
It is estimated counties owe suppliers in excess of Sh113.85 billion for goods and services by SMEs, and the figure could have since grown.
Therefore, the timely release of the funds cannot be gainsaid since the economy is trying to gain some traction, particularly if the money can cushion the SMEs from further eroding their value.
But such payout can only stimulate the economy if it will be distributed promptly, and in totality, to help the cash circulate faster within the economy. Unfortunately, the scourge of pending bills, which also afflicts the national government continues to stick like a sore thumb.
Despite warnings from the Executive, very little has been done even as the Public Finance Management Act gives Treasury express powers to withhold cash transfers to counties that renege on economic commitments.
This time, we urge Treasury to sharpen it’s fiscal discipline tools and reward those that follow regulations on the one hand, and punish those that go against the grain on the other.
However, and for bigger effect, similar treatment must be applied to national government ministries that refuse to release funds to suppliers in good time.
Indeed, people and institutions that refuse to pay bills should be regarded as economic saboteurs. Lest we forget, suffocating suppliers by denying them cash nearly led to a liquidity crisis, that lead to a presidential directive to pay up in 2019.
While a lot of water has since passed under the bridge, the country is in dire straits and in a worse economic situation, which calls for speedy release of funds to the rightful owners.
Only then would the economy start breathing again as we await the arrival of Covid-19 vaccines to stem the health crisis.