NAIROBI, Nov 20 (Reuters) - Kenya’s finance ministry will stop releasing funds to scores of local authorities and government ministries until they start paying billions of shillings owed to their suppliers, the acting finance minister said.
Business owners have accused national and regional government departments of delaying payments to suppliers worth more than 150 billion shillings ($1.48 billion). (reut.rs/334hZK0)
They have blamed the non-payments on mismanagement and corruption and said the East African nation’s economy is suffering.
“This delayed payment of goods and services ... led to deterioration of financial positions of businesses and in particular the SMEs (small and medium enterprises),” the minister, Ukur Yatani, said in a statement late on Tuesday.
He said his ministry had released the funds required to clear most of the pending bills in June. But 15 county governments and 53 national government ministries, departments and agencies had not made any efforts to pay.
Their funding would stop from the start of December, he said.
Last week Yatani acknowledged the government had regularly failed to meet revenue-collection targets, contributing to the overall funding shortfall.
The government’s move underlined a wider economic malaise, said Jibran Qureishi, economist for East Africa at Stanbic Bank.
“It just shows how dire things have become,” he said.
$1 = 101.6500 Kenyan shillings Reporting by Duncan Miriri; Editing by Andrew Heavens