advertisement
Editorials

EDITORIAL: Adopt caution in cash bid

State corporations
Exchequer already collects surpluses from all State corporations. FILE PHOTO | NMG 

The Treasury should be even-handed in its quest for cash from State corporations.

The move, intended to cut the government’s cost of borrowing, sounds prudent and well meaning.

However, the Exchequer already collects surpluses from all State corporations.

It should be careful not to take away all cash held by the parastatals, only to leave them short of working capital.

It would be wrong to cripple the institutions to the extent that they end up requiring bailout cash in the future.

advertisement

Already parastatal bosses have said that the move could take away the cash that they use for financing day-today operations and contingencies, as well as boosting their balance sheets whenever they need to borrow from banks or other lenders.

Commercial banks have also said that the order will take away deposits held in the parastatals’ accounts, hence affecting their liquidity.

Many of the State Corporations deal with crucial sectors as infrastructure, agriculture, tourism, capital markets, education and health that support the economy. Any ill-advised move could affect their operations, impacting heavily on the economy.

advertisement