The National Treasury building in Nairobi, Kenya/ Courtesy.
The National Treasury says plans are at an advanced stage in the bid to merge the Industrial and Commercial Development Corporation(ICDC), Industrial Development Bank(IDB) and Tourism Finance Corporation.
The merged outfit, the Kenya Development Corporation is set to enhance capacity by meeting financing requirements of key players in Kenya’s economy at below commercial rates and long tenure debt financing.
The Treasury also disclosed that there are ongoing reforms targeting the loss-making Kenya Post Office Savings Bank and the Postal Corporation of Kenya, to be undertaken during this financial year.
Further, the merger of Kenya Export Promotion and Branding Agency (KEPROBA) with Ken-Invest, Kenya Tourism Board and Kenya YearBook on the other hand to form Promotion Kenya Agency is also at advanced stages.
The merging of the Export Promotion Council and Brand Kenya to form KEPROBA was completed three years ago.
Kenya’s Treasury also said the process of privatizing state-owned sugar mills, which has faced many legal challenges and delays in the past, is also underway after a decision was made to lease the factories to private investors.
Kenya’s National Treasury has meanwhile guaranteed a number of loans to State Corporations and Government-linked firms mainly to undertake strategic projects and investments.
According to a review of Kenya’s three-year financial package from the International Monetary Fund(IMF), its Deputy Managing Director Antoinette Monsio Sayeh said that Kenya must maintain momentum on the structural reform agenda.
IMF Deputy Managing Director Antoinette Monsio Sayeh/ IMF.
“The very substantial progress made in assessing the financial situations of state-owned enterprises (SOEs) that pose the largest fiscal risks provides a solid basis for identifying least-cost approaches to address their financial challenges and should be complemented with efforts to improve oversight and management of SOEs more broadly,” said Sayeh.
Data by the Central Bank of Kenya reveals that the total outstanding Government Guaranteed Debt was Sh157. 22 billion as of June 30, 2021, from Sh165.25 billion as at the end of June 2020.
In the current 2021/22 financial year, fiscal risk analysis was performed on a sample of 18 State Corporations whose report identified and disclosed the fiscal risk exposure to Government arising from State Corporations.
A summary of their financial statistics estimates a maximum fiscal exposure of Sh1.3 trillion, which equates to 13.6 percent of GDP.
This creates a high degree of financial risk for the Government through potentially stepping in for the repayment of on-lent loans (Sh 664 billion), potential bailouts for guaranteed and non-guaranteed commercial loans (Sh 343 billion), other contingent liabilities such as pending court cases (Sh 109 billion) and potential liquidity injections for the clearance of arrears (Sh 211 billion).
The evaluation further assessed agencies projected cash flows for the period 2021/22 financial year to 2024/2025 financial year and contingent liabilities which may crystalize to the National Budget.
It found an estimated liquidity gap over the next five year period of Sh 382 billion taking cognizant of the effects of the COVID-19 pandemic with no further budgetary support nor more borrowings.
