President William Ruto has ordered a 30 percent budget cut for parastatals.
Speaking to chairs and Chief Executive Officers (CEO) of State corporations at State House Nairobi, the Head of State further directed that they should remit 80 percent of their profits to Treasury.
He similarly instructed regulatory bodies to remit 90 per cent of their surplus funds to the Treasury.
“We will give you directions on what to do with the remaining 20 per cent. There will be no exceptions. Everybody must comply,” President Ruto directed.
According to President Ruto, Kenya must begin living within its means and stop the habit of running huge budget deficits.
He stated that the time is up for loss-making parastatals and that those that make profits must stop wasteful expenditure, including financing largesse in their parent ministries and unnecessary procurement.
The President directed that the government, including State corporations, must live within its means. Consequently, expenditure must never exceed revenues collected.
He said some agencies have been making losses for years and have become a drain on the Exchequer.
“Now that the economy has stabilised, we cannot continue accumulating debt. Borrowing will only lead us down the cliff,” the President said.
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On wastage in State corporations, the President said: “The money some parastatals make does not belong to their boards or management. It belongs to the people of Kenya as returns on investment.”
The President regretted that the abuse of public resources has become so rampant that it is inhibiting service delivery.
He directed that, from now on, Government budgets and expenditures will be subjected to rigorous scrutiny.
“We will also leverage on technology to check on improper payments and maximise on the value for money,” he asserted.
The move to reduce expenditure, he explained, will stop unnecessary borrowing and accelerate the government’s transformation agenda.
“We must get it right. We must do what is right. This is the time,” he added.
He told the meeting that the government will engage in an elaborate consolidation process that will stop duplicity of functions, wastage and winding up of loss-making institutions.
He cited cases of parastatals that have duplicated and overlapping roles.
“It is illogical. We have to shut down some of these loss-making parastatals. We must end excess capacity.”
