Treasury CS Ukur Yatani leaves the Treasury Building on June 11, 2020. Treasury Cabinet Secretary Ukur Yatani on Tuesday defended the government’s quest for a Sh252 billion loan facility from the International Monetary Fund.
Kenya is seeking the loan under the institution’s extended fund facility and talks are set to conclude in the first quarter of 2021.
The CS told the Star in an exclusive interview the money would inject more capital into state-owned enterprises undermined by the shocks of the Covid-19 pandemic.
Nine state companies are under financial evaluation for cash distress. They include Kenya Airways Plc, Kenya Power, KenGen, KBC, East African Portland Cement Company and Tarda.
Kenya Power’s liabilities stand at about Sh115 billion, Kenya Airways (Sh79.8 billion), KenGen (Sh205 billion), KBC (Sh79 billion) and Tarda (Sh9 billion).
Yatani said the IMF talks are a routine engagement in which the Treasury is looking at policy changes to reform the state enterprises.
“We are looking at how to make them efficient and make them fit for the purpose, including giving them guidance on how to perform better in terms of governance,” he said.
The CS praised the process as being of an international standard with an aim to make the institutions disciplined.
Yatani said it was the government of Kenya that approached the Bretton Woods institution for the funding.
“This is a programme out of our own choice with reforms targeting state enterprises and it will run for three and half years. There are no conditions imposed on us but rather agreed outcomes-results.”
The CS said the aim was to help these state enterprises meet international standards in terms of performance and business flow, among others.Even so, there are concerns about the impact of borrowing on the state’s financial health.International Budget Partnership-Kenya holds that the situation may take a turn for the worse if the economy doesn’t pick up for the remaining half of next year.“It is tricky because of low revenue performance. The challenge is that the government is not keen on cutting expenditure; if you maintain the same level of expenditure without income, then borrowing is the only option left,” IBP-Kenya executive director Abraham Rugo said.Kenya is Sh1.5 trillion shy of breaking its Sh9 trillion public debt cap and is also pursuing a Sh164 billion development policy operations loan from the World Bank.The IMF in May approved a Sh78 billion loan under the Rapid Credit Facility to cushion the country against the adverse effects of […]