A new government payment plan is set to unlock relief for thousands of suppliers and contractors after the Treasury proposed Sh68 billion in the 2026/27 Financial Year to start clearing verified pending bills that have accumulated across key sectors of the economy.
Treasury Cabinet Secretary John Mbadi said the move follows a detailed audit of outstanding claims aimed at separating genuine obligations from disputed demands, paving the way for a structured settlement plan backed by available fiscal space.
He revealed that a special review committee examined 91,911 claims valued at more than Sh637 billion, approving 29,885 claims worth Sh235.6 billion for payment after verification.
Out of the approved amount, Sh80.3 billion has already been cleared through securitisation in the road sector, leaving a verified outstanding balance of Sh155.3 billion spread across other sectors.
“The verified outstanding balance will be cleared over two years, beginning in the 2026/27 financial year,” Mbadi said.
To begin reducing the arrears, the National Treasury has proposed Sh68 billion for the 2026/27 financial year, targeting verified pending bills owed to suppliers and contractors, with priority given to claims not exceeding Sh100 million. Mbadi said the plan will also accommodate part of the larger claims above Sh100 million to ensure a fair and inclusive payout process.
He noted that the strategy is designed to protect small and medium enterprises, which account for a large share of government suppliers and are often most affected by delayed payments. By focusing first on smaller claims, the government expects to ease pressure on business operations and improve liquidity in the private sector.
Mbadi added that with the Sh68 billion payout, the government expects to have settled 99 per cent of verified pending bills by number, which represents 63 per cent of the total value of verified claims. He further stated that the remaining Sh88 billion will be cleared through a combination of future budget provisions and financial instruments.
He explained that the repayment plan blends direct budget allocations with securitisation to ensure the obligations are cleared within the set timeline without destabilising fiscal management.
On the wider economy, the Treasury CS said the country’s banking sector remains stable, noting that it continues to support households, businesses, savings, and investment activities, and remains resilient in sustaining economic growth.