The national government has cleared Sh118.3 billion in pending bills during the first quarter of 2025, in a renewed effort to unlock cash flow for contractors and suppliers while addressing long-standing arrears across key ministries and departments.
Latest data from the National Treasury reveals that the total outstanding pending bills dropped significantly from Sh539.9 billion at the end of 2024 to Sh421.6 billion by March 2025.
This reduction follows a directive by the Exchequer authorizing ministries and state agencies to begin settling verified arrears.
A large portion of the payments was channelled toward infrastructure-related obligations, particularly in the road sector.
Treasury Cabinet Secretary John Mbadi confirmed that the government has started clearing Sh80 billion worth of road-related arrears using proceeds from the road maintenance levy.
“About Sh80 billion of the approved bills relate to the road sector, and we have started settling those bills using the securitisation of the Sh7 per litre road maintenance levy,” said Mbadi.
Pending bills related to roads are being paid separately through proceeds of a bond being floated by the Kenya Roads Board (KRB). The KRB has received approval to issue a Sh135 billion bond, with proceeds earmarked for settling verified infrastructure-related arrears.
Investors in the bond will be compensated through the Roads Maintenance Levy Fund, which was increased from Sh18 to Sh25 per litre in July 2024. While the bond’s pricing is still under discussion, Treasury sources indicate it may be set at 1.5 percentage points above the current 91-day Treasury bill rate.
Mbadi further disclosed that several ministries and agencies — including sensitive dockets such as Defence — have already been cleared to commence payments. The move is expected to ease the financial burden on contractors, especially those who have waited years for dues.
“As verification nears completion, we will seek Cabinet approval to add verified arrears to the list of bills to be settled,” Mbadi said.
According to the latest report by the Pending Bills Verification Committee, out of the Sh663 billion submitted by ministries, departments, agencies and state corporations, Sh578 billion has been verified, with only Sh229 billion certified for payment.
The remaining Sh421.6 billion pending as of March 2025 comprises Sh162 billion in recurrent expenditure and Sh259.7 billion in development-related obligations.
These include outstanding payments to contractors, unremitted statutory deductions, and pension arrears, particularly those owed to the Local Authorities Pension Trust.
The government is also grappling with legacy debts. While most state corporations’ bills relate to ongoing contracts, many MDAs are dealing with historical arrears that date back several fiscal years.
