The Treasury has now asked the parastatals to remit the surplus funds to the national Treasury so that the government reduces on borrowing.
Permanent Secretary of Treasury Julius Muia has told the press that the ministry has been engaging with heads of parastatals since last week Monday to see how much they will be remitting surplus funds in their banks account and near-liquid asset.
Dr. Julius Muia said that this is in accordance with the law and they are just doing the right thing.
Dr. Muia said “It has happened in the past but it has not been targeting all State corporations as it is happening now. It’s only that we want to be more formal how we do it this time round in a more orderly way.”
“If they got surplus money they payback and that would be taken back in accounting what is called the retained earnings and that is quite in order,” he said.
The banks have raised their concern that if the move is done. It might affect their liquidity operations. This is because parastatals are the main buyers of the treasury securities.
However, their effort to get answers from the parastatal heads hasn’t yielded fruits as the heads claim that they are still negotiating with the treasury.
Dr. Muia said, “We’re not doing it without consultation, we’re looking at their balance sheets, projected requirements going forward and how much of their surplus funds will be remitted to the Treasury. So it is a very orderly way in which we are doing it.”
It will be remembered that in 2015, CS of Treasury then Henry Rotich, had exempted the parastatals from remitting corporate tax and instead submit 90 percent of their surplus funds from their accounts.