State corporations are facing tough times for the year starting July after the Treasury Wednesday night issued new directives to cut about Sh400 billion from their planned recurrent expenditure.
In the circular, Treasury Cabinet Secretary Njuguna Ndung'u gave state corporations until Saturday to revise their recurrent budgets for the 2024/25 financial year and cut planned recurrent expenditure by an amount equivalent to 30 per cent of their approved recurrent expenditure for the current financial year.
"Every state corporation should re-submit its 2024/25 FY recurrent expenditure budget which has been rationalised to a level that is not more than 70 percent of the approved 2023/24 FY budget.
All submitted 2024/25 budgets by state corporations have been reverted to respective corporations for rationalisation and should be re-submitted through GIMIS by April 2, 2024," CS Ndung'u said in the address to all state corporations.
Approved recurrent spending for the national government in the current financial year, which ends in June, is Sh1.45 trillion.
30 per cent of this spending amounts to about Sh435 billion. And with state corporations taking a big chunk of the expenditure, cutting their recurrent budgets by 30 per cent this will be close to Sh400 billion.
The directive, the CS said, is in tandem with the government's ongoing fiscal consolidation, which seeks to enhance revenues and control expenditures.
It also comes when Parliament's budget committee revealed that the Treasury did not fund about Sh860 billion that different Ministries, Departments and Agencies (MDAs) had requested to spend in the 2024/25 financial year amid poor tax collection returns by the Kenya Revenue Authority (KRA).
"As you are aware, the government is desirous of undertaking fiscal consolidation geared towards enhancing revenues and expenditure control. This is important to ensure there are adequate resources for the provision of critical government services and implementation of government priority projects," CS Ndung'u stated.
It also reiterated directives it had issued on March 18, suspending all purchases, procurement of corporate wear and promotional merchandise.
"Suspend and immediately cease the procurement, printing and production of corporate wear, including but not limited to T-shirts, shirts, tracksuits and any other branded items and suspend and immediately cease the purchase of promotional merchandise such as calendars, diaries, umbrellas, power banks, key holders, bags, flasks, cups, branded traditional blankets/'shukas', notebooks and any other promotional materials," Treasury directed.
The circular also banned a list of privileges corporation board members enjoy, asking CEOs to stop paying for individual or corporate club membership fees or annual subscriptions immediately.
"Payment of subsistence allowance and reimbursement for use of personal cars can only be made to a Director who will be required to travel and spend a night away from his/her declared residence while attending a board activity," Treasury stated.
It added that all board expenses such as sitting allowances, training, travel, and reimbursement for personal cars, must be charged on board accounts and not secretariats'.
