State entities have failed to remit a combined Sh72.96 billion in pension and pay-as-you-earn (PAYE) deductions amid a cash-flow crunch facing the agencies.
Revelations by the Parliamentary Budget Office (PBO) show that unremitted pension dues stood at Sh47.6 billion while PAYE was Sh25.3 billion as at the end of last month.
A number of State corporations and semi-autonomous government agencies (SAGAs) have fallen on tough times amid mounting losses for the commercial ones, mismanagement and thinning financial support from the State.
Overall, the entities held Sh220.81 billion in unremitted PAYE, pension, contributions to the National Health Insurance Fund (NHIF) and the National Social Security Fund (NSSF), Sacco deductions, staff loan deductions and consumables in the period.
“The scenario points to general liquidity challenges in settling expenditure commitments as well as poor corporate governance, including weak or non-existent oversight between the respective State corporations /SAGAs Board and parent ministry/National Treasury,” PBO says.
Arrears for consumables and general supplies were Sh30.4 billion followed by sacco deductions at Sh2.68 billion, Sh2.47 billion for staff un-remitted staff loan deductions and Sh407.36 million for the NSSF and the NHIF (Sh80.92 million).
The unremitted dues rose 17 percent from Sh188.39 billion in June last year indicating a combination of principal amounts and penalties, as the entities grapple with losses that have significantly hurt their cash flows.
Unpaid PAYE jumped by Sh5 billion between June last year and last month, marking it the biggest jump of all statutory deductions while that of pension rose Sh800 million in the period.
Some 22 State-owned agencies posted losses of at least Sh1 billion each in the 2022/23 financial year, according to a report by the Treasury.
Most of the entities have been relying on bail-outs from the National Treasury, fueling a push to have the State sell its stake in the firms to private investors.
Spiraling debt payment obligations, increased funding needs for development projects and pressure from some of Kenya’s key financiers such as the World Bank and International Monetary Fund have forced the Treasury to significantly cut the bail-outs.
PBO says the government needs Sh150 billion annually for the next five financial years to bail out the entities besides directing them to reserve 20 percent of their budgets in a twin-pronged approach to clear the debts.
The report by PBO— the office that advises lawmakers on budget and economic affairs— did not however disclose the names of the entities with the highest share of the arrears.
