Parastatals' budgets slashed by 40pc ahead of mergers, closures
National Treasury Principal Secretary Chris Kiptoo.
What you need to know:
- Expenditure cuts are in line with Treasury’s guideline through a March 27 circular.
- The Bomas of Kenya faces a 7.49 percent trim on its budget to Sh230.84 million.
The budgets for parastatals earmarked for mergers and dissolutions from July have been slashed by more than 40 percent on average.
The National Treasury projects to save more than Sh2.3 billion from the proposed mergers of about 35 state corporations in the first phase of restructuring through reduced budgets for administration and maintenance of offices as well as the remuneration of staff.
President William Ruto said on Thursday last week that heads of parastatals had agreed to a request to cut their recurrent spending by nearly a third.
This is part of austerity measures in a far-reaching rationalisation plan that is backed by the International Monetary Fund.
Treasury Principal Secretary Chris Kiptoo said the proposed austerities will mostly affect non-essential expenditures such as memberships to clubs for senior managers, repairs and hiring of new staff.
Budget allocations
An analysis of recurrent budget allocations for the upcoming financial year, however, indicates the proposed outlays for some parastatals, excluding appropriations-in-aid (revenue they generate while delivering public service), has been cut by as much as three-quarters.
The expenditure cuts are in line with Treasury’s guideline through a March 27 circular, which made it clear that entities identified for mergers and closures will receive minimal budgetary allocation for the year starting July.
The risks associated with struggling parastatals amounted to Sh1.24 trillion by the financial year ended June 2023.
These include Sh145.4 billion in guaranteed loans, Sh111.80 billion in non-guaranteed loans and Sh983.20 billion on-lent loans.
The Presidential Council of Economic of Advisors that is chaired by Dr David Ndii, and the Treasury team, led by Dr Kiptoo, last month identified about 35 entities for restructuring.
The budget analysis shows that the net recurrent budget for Kenya Water Institute has been cut the most, from 183 million to Sh44 million — a 75.74 per cent reduction.
The firm is set to be merged with the Regional Centre on Groundwater Resources, Education, Training and Research whose recurrent budget has been reduced 9.42 per cent to Sh62.5 million. It is followed by the Kenya Investment Authority, whose budget has been slashed 71.23 per cent to Sh90.88 million from Sh315.91 million.
Consolidation
KenInvest is proposed for consolidation with the Kenya Export Promotion and Branding Agency (Keproba), Kenya Tourism Board (KTB), Tourism Research Institute and Kenya Yearbook Editorial Board.
Keproba’s budget is down 50.31 per cent to Sh217.43 million, KTB’s by 58.77 per cent to Sh114.06 million, TRI’s by 67.57 per cent to Sh18.46 million, while the Kenya Year Book’s spending has been reduced 37.94 per cent to Sh70.75 million.
The recurrent expenditure for the Women Enterprise Fund, which is facing a merger with the Youth Enterprise Development Fund (YEDF) and Uwezo Fund, has been cut by 72.71 per cent to Sh81.10 million.
YEDF’s has been shaved 61.54 per cent to Sh125.02 million, while Uwezo’s is down 8.46 per cent to Sh140.70 million.
The Kenya National Qualification Authority will suffer a 51.59 per cent cut to Sh145.22 million. The entity is earmarked for a merger with the Commission for Universities Education whose expenditure has, nonetheless, been increased 10.38 per cent to Sh259.44 million.
The budget for the Kenya National Innovation Agency has been cut 64.44 per cent to Sh43.75 million.
The entity is being considered for a merger with the National Commission for Science, Technology and Innovation whose expenditure has been doubled (104.30 per cent) to Sh348.16 million.
The Bomas of Kenya, proposed for a merger with Kenya Cultural Centre, faces a 7.49 percent trim on its budget to Sh230.84 million.
The Kenya Cultural Centre, which has Sh89 million budget in the current year, has not been allocated a recurrent budget for the upcoming year.
