Editorials
Release idle parastatal cash to fund budget
Friday July 14 2023
The Central Bank of Kenya, Nairobi. FILE PHOTO | DENNIS ONSONGO | NMG
Four years ago, the Treasury embarked on a mop-up of excess cash balances held by parastatals, seeing this as one of the ways of cutting heavy borrowing by making better use of resources already at hand.
The thinking was that in borrowing from the parastatals, the government effectively borrows its own money and pays interest charges on it.
The parastatals, however, argue that the cash is used for financing day-today operations, and it also bolsters their balance sheets and improves their creditworthiness.
While both arguments are valid, it is still a concern to see that the holdings of government securities by these institutions have started growing again.
This increase backs the call by MPs for a special audit of the idle cash held in the parastatal accounts if only to ensure that they comply with the Treasury directives.
Releasing excess holdings to the exchequer while ensuring that they have enough to finance operations will help reduce the burden of the taxpayer to finance the budget deficit, releasing funds for development spending.
After all, the primary reason for setting up parastatals is to provide public services, not the pursuit of profits.
