An audit report on the financial risk of 50 State-owned enterprises (SOEs) will be out by the end of June, the Treasury has said, paving the way for International Monetary Fund (IMF)-backed restructures, including mergers and dissolution to cushion taxpayers from losses.
The Treasury said a committee formed to assess the financial health of the State firms is about to conclude its work.
“In the financial year 2023/2034, the National Treasury is undertaking financial evaluation for 50 SOEs, using their 2022/2023 FY audited statements and will report the outcome to the Fiscal Risks Committee by end of June 2024,” the Treasury said in its newly published Budget Policy Statement 2024.
“The National Treasury has customised the IMF Health Check tool in the Government Investments Management Information System that is being applied in the process of undertaking the financial analysis.”
Kenya has committed to approve an updated classification of SOEs by December 31, 2024, as part of its pledge to the IMF to restructure struggling parastatals and mitigate the risks they present to the taxpayer.
An analysis of 18 firms from the 2021/22 Financial Year which showed their risks primarily stem from liquidity challenges due to unfavourable revenue and economic performance.
“Debt-stricken SOEs constitute a potential source of fiscal risk. However, the government is cautious in issuance of guarantees and other support measures to State corporations upon such requests,” said the Treasury.
As of June 30, 2023, Treasury says, only three entities had their loans guaranteed by the government, amounting to about Sh170.2 billion, amongst which are the Kenya Airways (KQ) loans, which were as a result of novation of the airline’s debts taken over by the government.
Total undischarged government loans to SOEs stood at Sh961.7 billion by the end of the financial year ended June 2023, compared to Sh916.8 billion as of the close of June 2022.
