Ruto orders commercial parastatals to remit 80pc of net profit to Treasury
President Ruto meets parastatal heads and CEOs at State House Nairobi; budget cuts and planned privatisation of some institutions were on the agenda.
President William Ruto has threatened to close down loss-making government institutions over the next three years if they don't turn around their fortunes.
The Head of State has also ordered parastatal Chief Executive Officers (CEOs) to cut their recurrent budgets by 30 per cent.
At the same time, he ordered state-owned commercial enterprises to immediately start remitting 80 per cent of their after-tax profits to the National Treasury.
"We will give you instructions on what to do with the remaining 20 per cent," the President said.
Dr Ruto also ordered regulatory institutions to remit 90 per cent of their surplus funds to the National Treasury.
"There will be no exceptions. Everyone must comply," President Ruto directed.
President Ruto was addressing chairpersons and CEOs of State enterprises at State House Nairobi on Tuesday when he said some agencies have been making losses for years and have become a drain on the treasury.
"It is illogical. We need to close down some of these loss-making parastatals. We have to end overcapacity," President Ruto said, adding that Kenya must start living within its means and stop the habit of running huge budget deficits.
"In three years, we must have a balanced budget. It won't be easy, but we must do it," he said.
Dr Ruto directed that the government, including state enterprises, must live within its means. Therefore, expenditure must never exceed revenue collection.
President Ruto also ordered parastatal Chief Executive Officers (CEOs) to cut their recurrent budgets by 30 per cent.
"Now that the economy has stabilised, we cannot continue to accumulate debt. Borrowing will only take us over the cliff," the president said.
The time for loss-making parastatals is over, President Ruto said.
And those that are making profits must stop wasting money, including funding largesse in their parent ministries and unnecessary procurement.
Commenting on waste in state enterprises, the President said: "The money some parastatals make does not belong to their boards or management. It belongs to the people of Kenya as a return on investment".
While he regretted that the misuse of public resources had become so rampant that it was hampering service delivery, he directed that government budgets and expenditure would henceforth be subjected to rigorous scrutiny.
The move to reduce expenditure, he said, will stop unnecessary borrowing and accelerate the government's transformation agenda.
"We have to get it right. We have to do the right thing. Now is the time," he added. "We will also use technology to control improper payments and maximise value for money."
Dr Ruto also told the meeting that the government will embark on an elaborate consolidation process that will end duplication of functions, waste and the winding up of loss-making institutions.
He cited cases of parastatals with duplicate and overlapping functions.
