Treasury Sets Kshs95B Budget to Bail Out Parastatals

The Treasury has budgeted Sh95.5 billion to partly ease the cash crunch in key parastatals in three years from July 2022

A fiscal risk analysis conducted early this financial year estimated 18 key parastatals face a cash shortfall of Sh382 billion in five years.

The financial boost to debt-laden State-owned enterprises comprises Sh36.1 billion for the year starting July 2022.

Sh36.6 billion is for the following year and Sh22.8 billion is the final tranche.

Treasury Allocations

No bailout cash was allocated to the parastatals in the initial budget for the current financial year.

Cash-strapped State-run firms— including Kenya Airways, Kenya Power, Kenya Wildlife Service, and several universities — got a cumulative Sh36 billion bailout in the year ended June 2021.

This is after their revenue streams were eroded by pandemic trade shutdowns and travel restrictions.

State Corporation Enterprises offer social goods and services to the society, therefore, by not allocating funds to run their operations, most Kenyans will be deprived [of] their rights,” Treasury Cabinet Secretary Ukur Yatani wrote.

Some of the large parastatals that pose a high degree of financial risk for taxpayers include Kenya Airways, Kenya Railways Corporation, Kenya Power, Kenya Airports Authority, Kenya Electricity Generating Company, and Kenya Ports Authority.

Parastatal Funding

Public universities, on the other hand, are facing a Sh27 billion funding gap, according to the Universities Fund (UF).

The bailout will cover about a quarter of the shortfalls in budget outlays for the parastatals in coming years according to Business Daily.

The strategic parastatals are grappling with debts amounting to nearly Sh1.33 trillion, according to the latest Treasury estimates.

The fiscal risks facing key State corporations comprise Sh664.04 billion in loans the Treasury borrowed on their behalf and Sh239.74 billion in government-guaranteed debt.

Other debts include Sh103.07 billion non-guaranteed borrowing which the Treasury approved and Sh108.55 billion in contingent liabilities such as pending court cases.

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