The government is turning to cash-rich firms and agencies to fund its operations following a drop in tax collections in the wake of the Covid-19 pandemic economic fallout.
The Treasury has so far received a total of Sh14.8 billion from the Central Bank of Kenya (CBK) and Sh2.7 billion Kenya Pipeline Company, and expects Sh6.3 billion from Safaricom next month – taking its collections from the firms and agencies to Sh23.8 billion.
The CBK on Wednesday credited the Treasury’s account with Sh5 billion out of its surplus funds, marking its latest contribution to the government’s coffers.
The lender of last resort has now given the government a total of Sh14.8 billion since last year, including a Sh2.5 billion dividend on its results for the year ended June 2020 and Sh7.3 billion gained from the cancellation of the old Sh1,000 notes.
This signals the gravity of the country’s rapidly deteriorating cash-flow situation that is marked by falling revenues and worsening debt service obligations.
“The Central Bank of Kenya announces that on February 17, 2021, it transferred to the government Consolidated Fund Sh5 billion as an exceptional distribution from CBK’s General Reserve Fund in the current financial year 2020/21,” the banking industry regulator said in a statement.
“The CBK board authorised the transfer … noting the very exceptional circumstances caused by an unprecedented global pandemic that have put a strain on government’s resources, and having weighed the various factors as stipulated by the law.”
Revenue collection underperformed by Sh107.6 billion in the first six months of the financial year to December amid the coronavirus-related disruptions.
Safaricom has joined the CBK in accelerating payouts to the cash-strapped government, with the telco announcing its first ever interim dividend of Sh18 billion or Sh0.45 per share.
The telco will pay the dividend on or about March 31 to shareholders on record as of March 5.
“This is in recognition of the company’s solid half-year performance and to support our shareholders during these difficult economic times occasioned by the Covid-19 pandemic,” Safaricom said in a statement.The Treasury is one of the biggest beneficiaries of the surprise dividend announcement and will get a gross payout of Sh6.3 billion for its 35 percent stake in the country’s most profitable firm.The telco generates a lot of cash and has on occasion taken short-term loans from banks to fund larger dividend payouts.Safaricom’s net profit in the half year ended September dropped six percent to Sh33 billion due to removal […]
