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CBK pays Sh5.5bn dividend to State

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Central Bank of Kenya. FILE PHOTO | NMG

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Summary

  • The Central Bank of Kenya (CBK) Monday announced that it has paid the Treasury a Sh5.5 billion dividend, boosting the government’s cash position as it seeks to plug a widening budget deficit.
  • The funds are in addition to the Sh5 billion Treasury received seven months ago from the banking sector regulator’s cash reserves, said the CBK.
  • This brings the total payout by CBK to Treasury this year to Sh10.5 billion and marks the CBK’s latest contribution to the government’s coffers.

The Central Bank of Kenya (CBK) Monday announced that it has paid the Treasury a Sh5.5 billion dividend, boosting the government’s cash position as it seeks to plug a widening budget deficit.

The funds are in addition to the Sh5 billion Treasury received seven months ago from the banking sector regulator’s cash reserves, said the CBK.

This brings the total payout by CBK to Treasury this year to Sh10.5 billion and marks the CBK’s latest contribution to the government’s coffers.

“Having weighed the various factors as stipulated by law, the CBK Board authorised the additional transfer of Sh5.5 billion to the Government Consolidated Fund from the CBK’s General Reserve Fund,” said the CBK in a statement.

CBK’s surplus for the year ended June 2020 increased 59 percent to Sh41.5 billion underlining the cash rich apex bank is sitting on a cash pile.

The Treasury has in the past put the CBK on the spot over revenues that should accrue to the State. Treasury Secretary Ukur Yatani earlier complained that CBK was one of the State corporations that have withheld payment of dividends to the Treasury despite orders to surrender the cash.

Yesterday, CBK said in making its determination on what pay out to Treasury, the CBK board also considered CBK’s “financial needs with the objective of ensuring CBK is well-resourced to deliver on its mandate in the increasingly uncertain economic environment.”

It singled out need for resources to modernise CBK’s facilities and infrastructure in keeping with its mandate and provision of new generation currency in line with the 2010 Constitution.

“CBK is mandated to issue new generation currency, with an expected cost of Sh15 billion,” it said.

CBK, which makes money from currency conversions, interest on loans to banks and overdraft to the government also said it needs to increase its paid-up capital in the period ahead towards its authorised capital of Sh50 billion.

Mr Yatani in 2019 told Parliament that due to its different interpretations as to what it should surrender, the CBK was still holding State’s dividends running into billions of shillings.

He was then acting Treasury CS.

“The CBK is holding about Sh27 billion that needs to be surrendered to the Treasury. The CBK is not exempted from all other State agencies regulations,” Mr Yatani told the National Assembly’s Budget and Appropriations Committee.

“Whatever investments they have made in Treasury Bills and Bond, we have instructed that the principal and interest should be surrendered to National Treasury at the end of maturity,” Yatani said.