The National Treasury has banned revisions of the approved expenditure budgets of State corporations in a push targeted at wastage of taxpayers’ funds.
Treasury Cabinet Secretary Njuguna Ndung’u said the State agencies have also been outlawed from spending any funds generated or received above their approved revenue budgets.
“With effect from the date of this circular, all monies generated or received over and above the approved revenue budget should not be spent,” he said in a circular directed to Principal Secretaries of the various ministries and the chief executives of State corporations.
“Consequently, any revision of the approved expenditure budget regardless of whether or not it is less than 10 percent or from one sub-item to another is disallowed,” Prof Ndung’u said.
The Treasury further said that parastatals have been banned from funding operations or purchase of capital items for their own use or by ministries and State departments.
Capital items are long-lived tangible assets such as buildings, machinery, and equipment used to produce consumer goods or services. Capital goods are durable items and differ from consumer goods and services, which are the end product of production and manufacturing.
Prof Njuguna said payment of club membership of parastatal officials has been suspended effective March 27, 2024, while travel allowances would strictly be paid within the approved budgets.
“No State corporation shall pay for individual or corporate club membership fees or annual subscriptions with effect from the date of this circular,” the CS said.
“All board expenses including payment of sitting allowances, daily subsistence, training, domestic and foreign travel, and reimbursement for use of personal cars among others should be expenses from the approved board expense budget. It is irregular for any State corporation to expense any board activity to other votes other than from approved board expenses budget” Prof Ndung’u directed.
The Treasury said payment for the use of personal cars will be restricted to parastatal directors and monitored to avoid abuse.
“Payment of subsistence allowance and reimbursement for use of personal cars can only be made to a director who will be required to travel and spend a night away from his or her declared residence while attending a board activity,” Prof Ndung’u said.
Kenya has 290 parastatals of which 210 are non-commercial entities.
The directives by the Treasury came a day after President William Ruto accused State corporations of wastage of funds through largesse.
Speaking at State House Nairobi when he met the chief executives of State corporations on Tuesday, the President directed all parastatals to cut their recurrent budgets by 30 percent.
He also ordered regulatory institutions to remit 90 percent of the surplus funds to the Treasury while commercial corporations were directed to remit 80 percent of their profits after tax to the National Treasury.
The government is presently squeezed for funds amid missed targets by the Kenya Revenue Authority (KRA).
In the period between July last year and last month, KRA collected just 55 percent of the Sh2.49 trillion target, setting up the taxman for a race against time to raise Sh1.12 trillion in the remaining four months.
These collections were less than half (49 percent) of the original ordinary revenue target of Sh2.787 trillion that was set in the budget unveiled in June last year, the latest data by the Treasury shows.
The Parliamentary Budget Office (PBO) — the office that advises lawmakers on budget and economic affairs—projects that KRA is likely to miss the tax collections target for the current financial year by Sh330 billion.
It attributed the anticipated miss to tax collections underperformance since July last year.
The miss is set to further squeeze the ability of the government to fund key development projects, in turn hitting efforts to create jobs.
The revenue miss forecast by PBO will be an equivalent of 13.2 percent of the targeted Sh2.49 trillion for the financial year and will further squeeze the ability of the government to fund key development projects, in turn hitting efforts to create jobs.
