Uhuru order on T-bills yields a measly Sh9 billion

Parastatals have liquidated Treasury bills and bonds worth Sh9 billion since a presidential order that all State corporations stop dealing in government papers. 

President Uhuru Kenyatta issued the order last September as part of ongoing austerity measures by the State amid growing concerns about the country’s piling debt burden.

Latest data from the Central Bank of Kenya (CBK) shows that since September, parastatals have seen their share of domestic debt drop to 6.63 per cent as of December 27, the lowest in two years.

In value terms, it means that State corporations held Treasury bills and bonds worth Sh195.7 billion at the close of the year, down from Sh208 billion as of September 27.

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Parastatals’ share of the domestic debt has been on the rise, touching a peak of 7.5 per cent in September last year before it declined to a two-year low towards the end of the year.

While CBK’s weekly bulletin does not give a reason for the decline, it comes against the backdrop of Uhuru’s directive that State corporations reduce their stock of government papers as part of the State’s fiscal consolidation plan.  

Head of Public Service Joseph Kinyua, in a letter to Acting National Treasury Cabinet Secretary Ukur Yatani communicating Uhuru’s directive, also called for the speedy payment of all pending bills.

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“Pursuant to directives to furnish my office with reports on the progress made to comply by all affected State corporations, please note that the government has committed to complete these payments by November 30, 2019. I urge everyone involved to take necessary measures to meet the deadline,” said Mr Kinyua.

Already, National Treasury has identified Sh78 billion worth of savings and surplus funds, which they want to take away from State agencies, with Yatani insisting that the corporations have been illegally holding on to taxpayers' money. Treasury is reported to have received close to half of this money already.

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As part of the fiscal consolidation - a raft of measures used to bridge the gap between what the government collects in taxes and what it spends - Treasury also plans to slash expenditure on non-essential items such as tea, snacks, training and travel by half.

But the budget-trimming plan appears to have stalled, with the Office of the President and Parliament splashing billions of taxpayers’ cash on travel and hospitality.

As a result, the government spent an additional Sh1 billion on non-essential items in the first quarter of the current financial year, dealing a major blow to the much-touted austerity agenda.

According to the latest data from the Controller of Budget, State corporations spent Sh5.1 billion on travel, printing and advertising, training and hospitality.

This represented a 20 per cent rise in costs from a similar period in the 2018/19 financial year. In the first quarter of the financial year that ended in June 2019, the national government spent Sh4.2 billion on these items.

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The Presidency - which comprises both Kenyatta’s and his deputy William Ruto’s offices - almost doubled its expenditure on foreign travel to Sh30.4 million from Sh16.8 million previously.

Training, another expenditure item that the government hopes to freeze, grew by 23 per cent during this period from an average of Sh533 million to Sh683.7 million.

And even after most State corporations made it clear that such things as tea, snacks, water and other accompaniments would be off the menu, spending on hospitality increased by 12 per cent to Sh806 million from Sh719 million.

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TreasuryAusterity MeasuresT-Bills