Treasury CS Ukur Yatani has revealed that the government requires Sh382 billion to restore state-owned corporations back on their feet.
4 best-performing parastals in Kenya - Treasury CS
Treasury sampled 18 of the largest parastatals and established that only 4 were profitable.
According to a statement by CS Yatani, if these challenges are not addressed, they may crystallize into significant fiscal risks to Kenya's economy.
The government will be undertaking a restructure of some of the parastatals in the next five years as a condition for the disbursement of a Sh250 billion loan from the International Monetary Fund.
"From the 18 sampled state corporations for the financial evaluation, the estimated liquidity gap over the next 5-year period is Sh382 billion," read the statement.
Treasury also sampled 18 of the largest parastatals and established that only four were profitable.
They include Kenya Ports Authority, Kenya Pipeline Company, Kenya Airports Authority and Kenya Electricity Generating Company.
Kenya Power and Kenya Railways were observed to be highly indebted with loans, large liabilities and experiencing liquidity challenges.
The 18 parastatals have an estimated cumulative financial shortfall of about Sh70 billion annually.
Some of the measures the government has suggested to fill the Sh382 billion shortfall is conducting reforms, new concessional borrowing, deferred payments on loans, debt to equity swap and funding from the exchequer.
The reforms are expected to reinforce public accountability for delivering value for money in the State Corporations ' portfolio and mitigate fiscal risks to the exchequer.
Efficient and better-managed parastals will significantly contribute to stronger and more inclusive growth, by providing better services as well as help create the much-needed fiscal space for development spending by the National Government.
The financial performance and operational efficiency of many state-owned companies have been deteriorating in recent years, weighing heavily on public finances, by increasingly relying on budgetary support from the government in the form of grants, subsidies, government loans and debt guarantees.
These government bailouts are no longer proportional to the social and economic benefits gained from these corporations, in effect, limiting public resources available for investment in other critical areas of national development.
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