Loss-making parastatals must go – President Ruto

The time is up for loss-making parastatals, President William Ruto has said.

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, expenditures must never exceed revenues collected.

Speaking to chairs and CEOs of state corporations at State House Nairobi on Tuesday morning, President Ruto said some agencies have been making losses for years and have become a drain on the economy.

“Now that the economy has stabilized, we cannot continue accumulating debt. Borrowing will only lead us down the cliff,” the president said.

On wastage in state corporations, the President said: “The money some parastatals make does not belong to their boards or management. It belongs to the people of Kenya as returns on investment.”

Abuse of resources

The President 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 technology to check on improper payments and maximize 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 duplication of functions, wastage, and the winding up of loss-making institutions.

He 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

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 percent.

Additionally, commercial state corporations must, from now on, remit 80 percent of their profits after tax to the National Treasury.

“We will give you directions on what to do with the remaining 20 percent,” the president said.

Regulatory institutions were ordered to remit 90 percent of their surplus funds to the Treasury.

“There will be no exceptions. Everybody must comply,” President Ruto directed.