President William Ruto announced that the government would consider closing down loss-making state-owned enterprises.
Speaking to chairs and CEOs of state corporations at State House on Tuesday, President Ruto said some agencies have been making losses for years and have become a drain on the Exchequer.
“Now that the economy has stabilised, we cannot continue accumulating debt. Borrowing will only lead us down the cliff,” the president said.
On wastage in state corporations, the President said that the money some parastatals make does not belong to their boards or management, but belongs to the people of Kenya as returns on investment.
The head of state regretted that the abuse of public resources has become so rampant that it is inhibiting service delivery.
He directed that, from now on, government budgets and expenditures will be subjected to rigorous scrutiny.
“We will also leverage on technology to check on improper payments and maximise on the value for money,” he asserted.
The move to reduce expenditure, he explained, will stop unnecessary borrowing and accelerate the government’s transformation agenda.
“We must get it right. We must do what is right. This is the time,” he added.
He told the meeting that the government will engage in an elaborate consolidation process that will stop duplicity of functions, wastage and winding up of loss-making institutions.
He also cited cases of parastatals that have duplicated and overlapping roles.
“It is illogical. We have to shut down some of these loss-making parastatals. We must end excess capacity,” the head of state said.
President Ruto said Kenya must begin living within its means and stop the habit of running huge budget deficits.
“In three years’ time, we must run a balanced budget. It won’t be easy but we must do it,” he said.
The president also directed the CEOs to reduce their recurrent budgets by 30 per cent.
Additionally, commercial state corporations must, from now, remit 80 per cent of their profits after tax to the National Treasury.
“We will give you directions on what to do with the remaining 20 per cent,” the President said.
Regulatory institutions were ordered to remit 90 per cent of their surplus funds to the Treasury.
“There will be no exceptions. Everybody must comply,” President Ruto directed.
And those that make profits must stop wasteful expenditure, including financing largesse in their parent ministries and unnecessary procurement.
The president directed that the government, including state corporations, must live within its means. Consequently, expenditure must never exceed revenues collected.