The Treasury’s earnings from public investments surpassed the target by Sh18.73 billion during the first quarter of the current fiscal year when Safaricom #ticker:SCOM wired dividends early, helping ease cash flow pressures at a time taxes fell short by Sh62.95 billion.
Latest exchequer disclosures show investment revenue amounted to Sh21.32 billion in the three months to September, overshooting the Sh2.59 billion target by more than seven-folds.
The over-performance came at a time Safaricom — the largest source of dividends for the government — paid shareholders three months earlier than it has done in recent years.
The giant telco paid shareholders a final dividend of Sh1.40 per share around August 31, unlike in the past years when the payout was done in November or December.
The early pay by Safaricom helped ease cash flow crunch at the Treasury in the amid Covid-19 economic fallout, which has seen tax collection underperform due to layoffs, pay cuts for retained staff and lower corporate earnings.
The Treasury owns a 35 per cent stake, or about 14. 02 billion shares, in Safaricom, which translated to a windfall of nearly Sh19.63 billion towards the investment revenue stream for the Treasury.
The dividends booked in the first quarter ended September accounted for more than half of the Sh40.91 billion the Treasury has budgeted for the year ending June 2021 from parastatals, State agencies as well as quoted and private firms where taxpayers have an interest.
The above target performance came in a period when tax collections for the quarter dropped to Sh317.68 billion compared to Sh372.34 billion in the same period last year, prompting the Treasury to seek loans from institutions like International Monetary Fund.