Government allocates Sh68 billion to settle verified pending bills in 2026/27 budget

The Government has proposed Sh68 billion to settle verified outstanding claims in the 2026/27 Financial Year arising from pending bills owed to suppliers and contractors across various sectors.

Speaking while presenting the 2026/27 Financial Year Budget in Parliament on Thursday, Treasury CS John Mbadi revealed that the Committee established to review outstanding claims reviewed 91,911 claims worth over Sh637 billion and recommended 29,885 claims amounting to Sh235.6 billion for settlement.

Following this verification process, Mbadi said Sh80.3 billion has already been settled through securitisation in the road sector, leaving a verified outstanding balance of Sh155.3 billion across other sectors.

He said the government will address the remaining obligations through a balanced and sustainable approach that combines direct budget allocations and securitisation.

“The verified outstanding balance will be cleared over two years, beginning in the 2026/27 financial year,” Mbadi said.

In the 2026/27 financial year, the National Treasury has proposed a budget allocation of Sh68 billion to settle verified pending bills owed to suppliers and contractors, with priority given to those owed up to Sh100 million. Mbadi said the allocation will also partly cater for suppliers and contractors owed above Sh100 million to ensure fair inclusion across the board.

He noted that the approach is designed to ensure that the majority of suppliers, especially small and medium enterprises, are paid on time to support their operations. He added that settling smaller claims first will help protect working capital and strengthen business continuity for firms that depend on government payments.

Mbadi noted that with the payment of Sh68 billion worth of claims, the government will have settled 99 per cent of verified pending bills by number, representing 63 per cent of the total value. He said the remaining Sh88 billion in verified claims will be addressed through other budgetary provisions and financial instruments.

Mbadi further explained that the policy of prioritising pending bills below Sh100 million is intended to support micro, small, and medium enterprises, which form the bulk of suppliers and are most affected by delayed payments. He said this approach is expected to improve cash flow and sustain economic activity across key sectors.

In the financial sector, the Treasury CS said Kenya’s banking system remains stable and continues to support households, businesses, savings, and investment across the country. He added that the sector remains strong and resilient in supporting economic growth.