Court asked to suspend budget making process over Sh698b bills

A petition has been filed seeking to suspend the ongoing budget-making process for the 2025/2026 financial year.

The lawsuit lodged by Operation Linda Jamii and led by Dr Fred Ogolla seeks to stop the process until the government clears all the pending bills amounting to over Sh698.27 million.

The petitioner is asking to court orders barring the National Assembly and the National Treasury from going on with the discussion and approval of the Budget Policy Statement.

The lobby group argues that it is unconstitutional and fiscally irresponsible for the government to proceed with new budget allocations while ignoring unpaid debts, which continue to strangle the private sector particularly the micro, small and medium-sized enterprises (MSMEs).

According to the petition, the national government owes Sh516.27 billion, with State corporations accounting for Sh379.8 billion, and ministries, departments and other agencies owing Sh136.5 billion.

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County governments, on the other hand, have accumulated unpaid bills amounting to Sh182 billion, with county executives and assemblies holding Sh179.87 billion and Sh2.11 billion respectively.

The lobby group reveals that the national government’s pending bills reportedly rose by Sh29.4 billion in just three months between March and June 2024, showing a growing fiscal burden.

Operation Linda Jamii also claims that the budget statement issued by the National Treasury on February 13 makes no meaningful provision for the settlement of the debts.

The petitioner further terms the policy as “economic betrayal”, especially as it proposes Sh60 billion for MSME loans under the Hustler Fund while the same SMEs remain the primary victims of the delayed payments.

“You cannot claim to uplift MSMEs while you are the very reason they are collapsing,” says Ogolla.

“This contradiction is both hypocritical and dangerous. You cannot promise to empower MSMEs while denying them what they are already owed.”

The petition seeks several declarations from the court, including that the pending bills be explicitly included as a priority in the Budget Policy Statement, that specific funds be ring-fenced for settling verified debts, and that the National Treasury issues clear guidance to ministries, agencies, and county governments to prioritise pending bills in their own budgets.

Further, it calls for an independent study of the bills by the Auditor-General and the establishment of a monitoring and reporting framework to ensure transparency in the settlement process.

“An order be issued for the purpose of compelling Treasury to pay all unpaid pending bills from June 1, 2005, to June 30, 2022, the committee notice to all accounting officers of the various state departments,” says the petitioner.

In support of their case, the lobby group refers to a Gazette Notice of September 29, 2023, through which President William Ruto appointed a verification committee to review the legitimacy of outstanding payments

However, Operation Linda Jamii argues that no tangible progress or communication has been made regarding the findings or actions taken, creating an atmosphere of mistrust and fiscal mismanagement.

They contend that the current budget statement contradicts the National Treasury’s stated economic goals, especially its public commitment to support MSMEs through the Bottom-Up Economic Transformation Agenda.

The petition argues that proceeding with the budget-making process under such circumstances is not only unconstitutional but also unethical, as it puts thousands of local businesses, many of which took out loans to fulfill government contracts, at risk of default and legal action from lenders. 

Justice Grace Nzioka directed the petitioner to serve the National Assembly and the Treasury by Thursday. The two are supposed to file their responses by Friday next week.