4 December 2012

Kenya: Treasury Issues Date for Budget Deadlines

STATE corporations have until the end of next month to submit the annual budgets for the next financial year to their parent ministries and to the Treasury.

This is in accordance to a Treasury circular on the guidelines for state corporations outlining how they should prepare their budgets for the 2013/2014 financial year. According to the guidelines, parastatals should have submitted their annual budgets not late than January 31.

The guidelines demands that preparation of the 2013/2014 year capital budget be informed by Vision 2030 and aligned to the Medium Term Plan priorities.

Further, capital budgets should be consistent with sector or ministry strategic objectives, realistic and based on resources that are available from internally generated revenues, borrowings and/or allocated funds under the sector/ministerial ceilings.

Additionally, state Corporations are supposed to ensure that all capital projects generate a reasonable rate of return which should be benchmarked with, and be comparable to the industry they operate in.

However, in cases of non -commercial state corporations where this may not be quantifiable in financial terms, an adequate justification should be provided in terms of other criteria such as socio-economic impact.

And just like last year, all commercial state corporations are expected to generate reasonable returns and to declare and pay dividends to the National Treasury and other shareholders. "Commercial state corporations who do not already have dividend policies should formulate appropriate dividend policies and submit the same to the National Treasury," the guidelines say in part.

The Treasury has stakes in institutions such as Kenya Commercial Bank, Consolidated Bank, Telkom Kenya, Safaricom, Kenya-Re, East African Portland Cement, KenGen, Kenya Power and many others. However, only a handful of this has been publicly declaring their dividend to the Treasury but the directive compels all of them to do so.

State corporations have also been urged not to enter into commitments or initiate new programmes, projects or activities in excess of funds allocated to them under the national budgetary provisions or funds available to them from other sources including internally generated revenues.

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