Cutting down costs: State corporations ordered to remit 80% of net profit to Treasury
As part of the ongoing reforms to cut on
government expenditure and enhance revenue collections, the National Treasury
has instructed parastatal heads to ensure that budgets for the next financial
year which commences on July 1 are rationalized.
This, according to Treasury Cabinet Secretary
Prof. Njuguna Ndung’u, will entail cutting down the recurrent expenditure by 30
per cent.
CS Ndung’u wants the agencies to resubmit
recurrent expenditure budgets for the next financial year, reflecting not more
than 70 per cent of the current budgets on operations; they have up to April 2 to
do so.
The parastatals will not be allowed to embark
on new projects without written approval from the National Treasury.
For institutions that are commercial in
nature, they have been directed to provide 80 per cent of profits after tax for
payment of dividends, meaning they will be paid to government to enhance
revenue collection.
Regulatory authorities have been directed to
remit 90 per cent of surplus funds to the government.
For parastatals that generate revenues beyond
expected, they have been instructed that they shall not spend it at source.
They shall also not be allowed to revise their approved expenditure budget even
if such revision is below ten per cent of the budget.
To cut unplanned expenditure, parastatals
have been banned from funding operations and capital expenditure for
ministries, departments, State corporations and agencies, an avenue that had
been used by some of the parent ministries.
To cut on luxuries, no parastatal shall be
allowed to pay for club membership fees whether for individual or corporate
categories.
CS Ndung’u further directs that payment of
subsistence allowance and reimbursement for use of personal cars shall only be
payable to a director who travels and spends a night away from declared
residence.
The CS decried failure by some of the
agencies to mainstream payments and budgeting activities on the digital
platforms.
Prof. Ndung’u wants all agencies to
immediately sign up on eCitizen and the government investments management
information system for processing of budgets.
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