State corporations are staring at a second wave of pressure from the Treasury to surrender more than Sh12 billion that is needed to jumpstart the economy after Covid- 19 is contained.
The Treasury has taken aim at the parastatals to surrender surplus funds meet budget shortfall for President Uhuru Kenyatta’s ambitious Sh3.7 post-Covid- 19 Economic Stimulus Package (ESP).
“The unfunded estimates of Sh12.338 billion will come from State corporations,” said the Treasury.
The Treasury has tabled in Parliament further amendments to the Budget Estimates for 2020/21 to secure funding for the economic stimulus programme.
“The above mentioned amendments will be funded through a combinations of budget realignment, additional funding from development partners and mopping of surpluses from the parastatals,” said Ukur Yatani, Treasury Cabinet secretary said in a letter also copied to Budget and Appropriations Committee chairperson Kimani Ichung’wah.
Cash rich parastatals came under immense pressure last November to surrender surplus funds.
On November 11, 2019, Mr Yatani directed State agencies to surrender surplus cash as the government raced to clear a backlog of pending bills.
The Treasury defended the recalling of the money, arguing that loose funds in regulatory entities were filling a hole that would otherwise prompt additional borrowing.
"We’re not doing it without consultation, we’re looking at their balance sheets, projected requirements going forward and how much of their surplus funds will be remitted to the Treasury. So it is a very orderly way in which we are doing it," said Treasury PS Julius Muia earlier.
In February, the Treasury announced that it netted Sh78.54 billion in non-tax collections including surplus cash held by State corporations in the first-half of the current fiscal year.
The pursuit of cash in parastatals followed miscellaneous amendments to the Kenya Revenue Authority (KRA) Act and Public Finance Management Regulations, through the Finance Act 2018, which empowered the taxman to collect 90 percent of surplus funds in regulatory agencies.
The Treasury had targeted Sh78 billion in the first year ended June 2019, but ended up with only Sh10.07 billion.
The KRA blamed the underperformance on a lack of a specific date that funds are due to be remitted by the State agencies as well as absence of enforcement measures.
Further amendment to the Public Finance Management Act regulations have since set October 31 as the deadline for cash-flushed entities to surrender excess funds for the financial year which ends in June.