The cabinet on Tuesday ordered all ministries and state departments to cut 10% of their operational budgets for the 2023/24 (July-June) fiscal year.
This is as the government continues to face deepening economic challenges due to growing debt repayments, rising interest rates and high taxes that have curbed consumer demand.
“As part of the administration’s fiscal consolidation plan that seeks to contain the fiscal deficit, cabinet sanctioned the reduction of the recurrent budget of each ministry and state department by 10%,” State House said in a statement.
The changes will be made through a supplementary budget, it said.
The cabinet also rescinded a government purchase of 60% of shares in Telkom Kenya from London-based private equity firm Helios, the presidency said, escalating a row that erupted after a presidential election in August last year.
The decision seeks to reverse a deal struck in the last months of President Uhuru Kenyatta’s administration, which nationalised the telecoms operator for a price of 6 billion shillings ($40.43 million).
“By dint of this decision by Cabinet, Jamhuri/Helios will refund to the Government of Kenya the amount paid as consideration for the takeover,” a dispatch from State House said.
The Cabinet said the decision is part of government’s move to address governance challenges posed by the nationalisation of the telco.
“The decision by Cabinet offers Telkom Kenya an opportunity to source and onboard another strategic investor, subject to the receipt of all regulatory approvals,” the dispatch said.
“Cabinet’s intervention will enhance the operational capacity of Telkom Kenya and make it a competitive player in the telecommunications market,” the Cabinet resolved.
The buyout deal was entered four days before the August 9, 2022, elections where the government bought 60 per cent of the ordinary shares of Telkom Kenya held by UK-based Helios Investors LLP and its Mauritius-based subsidiary, Jamhuri Holdings Limited, at a cost of Sh6.09 billion.
The deal, however, raised controversy after it emerged that the National Treasury overruled the Controller of Budget and bought out Helios Investment’s stake in Telkom Kenya Ltd in a transaction that lacked parliamentary approval.
