City Hall debt climbs to Sh78.1b as interest and penalties pile up

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The Nairobi County Government’s debt to third parties has reached an all-time high of 78.1 billion shillings catastrophic for contractors and suppliers.

Debt increased by 5.9 billion shillings in one year, from 72.9 billion shillings as of June 30, 2020 to 78.1 billion shillings as of June 30, 2021, despite the efforts of the Nairobi Metropolitan Service (NMS) and the town hall to settle outstanding bills last year.

According to the Nairobi County Budget Review and Outlook Paper 2021 tabled to the assembly last week, the debt is owed to statutory bodies, traders and litigation, a loan from the KCB Bank, contingent liabilities and loans guaranteed by the government.

CEC Finances Allan Igambi, while filing the document, said that the increase in debt was a result of accumulated interest and penalties charged to statutory creditors from 2014.

“The debt of the Local Authority Pension Fund (Lapfund) currently stands at 23 billion shillings. It increased by 3.4 billion shillings from the 19.67 billion shillings recorded in June 2020, ”the report said.

The debt of the local authority pension trust (Laptrust) stands at 14.99 billion shillings, after increasing by 2.4 billion shillings.

Contingent liability which includes Laptrust’s actuarial deficit, the difference between social security obligations and the fund’s income rate, is 2.6 billion shillings and the loans guaranteed by the national government are 19.1 billion shillings. of shillings.

In addition, the statutory debt owed to the National Social Security Fund (NSSF) is 381 million shillings.

The Kenya Revenue Authority (KRA) also owes 751 million shillings.

Under the utilities, Kenya Power owes Sh477 by the town hall. This represents a reduction in debt after the town hall recently paid 171 million shillings following Kenya Power’s decision to cut power to county government buildings that provide essential services to the public.

The town hall, however, has yet to pay the water bills amounting to Sh 234.9 million while suppliers and contractors are owed Sh 2.65 billion after the payment of Sh 2.69 billion Sh.

Bank loans and overdrafts amounted to 4.4 billion shillings while litigation costs rose from 4.1 billion shillings to 6.7 billion shillings, an increase of 2.65 billion shillings. shillings.

The retirees were also not paid Sh138 million. They have, however, been paid Sh35 million so far.

To remedy the situation, CEC Igambi says the county government is working to increase self-revenue collection by adopting the technology.

The county treasury is looking to automate its 137 revenue streams to improve its own source collection. It aims to collect 18.8 billion shillings from its own income in fiscal year 2022/2023.

The county is also looking to cap spending and redirect some funds to paying down debt.

“The town hall has also initiated a renegotiation plan with the statutory bodies including Laptrust on interest and penalties for the rapid service of the debt,” added Igambi.

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