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CBK pays $ 5.5 billion dividends to the state

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CBK pays $ 5.5 billion dividends to the state


Central Bank of Kenya. FILE PHOTO | NMG

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Summary

  • The Central Bank of Kenya (CBK) announced on Monday that it paid the Treasury a dividend of 5.5 billion shillings, boosting the government’s cash position in its attempt to cover a growing budget deficit.
  • The funds are in addition to the Sh5 billion from the Treasury received seven months ago from the banking sector regulator’s cash reserves, the CBK said.
  • This brings the total CBK payment to the Treasury this year to Sh10.5 billion and marks the last contribution of the CBK to the government coffers.

The Central Bank of Kenya (CBK) announced on Monday that it paid the Treasury a dividend of 5.5 billion shillings, boosting the government’s cash position in its attempt to cover a growing budget deficit.

The funds are in addition to the Sh5 billion from the Treasury received seven months ago from the banking sector regulator’s cash reserves, the CBK said.

This brings the total CBK payment to the Treasury this year to Sh10.5 billion and marks the last contribution of the CBK to the government coffers.

“Having weighed the various factors as stipulated by law, the CBK Board authorized the additional transfer of Sh5.5 billion to the Government Consolidated Fund from the CBK General Reserve Fund,” the CBK said in a statement.

CBK’s surplus for the year ended June 2020 increased 59 percent to Sh41.5 billion, underscoring that the cash-rich apex bank is sitting on a pile of cash.

In the past, the Treasury has put the CBK in a bind for revenues that should accrue to the state. Treasury Secretary Ukur Yatani previously complained that CBK was one of the state corporations that withheld dividend payments to the Treasury despite orders to hand over the cash.

Yesterday, CBK said that in making its determination on what it will pay to the Treasury, the CBK board also considered CBK’s “financial needs with the aim of ensuring that CBK has the resources necessary to fulfill its mandate in an increasingly economic environment. uncertain”.

He highlighted the need for resources to modernize CBK’s facilities and infrastructure in accordance with its mandate and the provision of next-generation currency in accordance with the 2010 Constitution.

“CBK is mandated to issue next-generation currency, with an expected cost of Sh15 billion,” he said.

CBK, which makes money from currency conversions, interest on bank loans and government overdrafts, also said it needs to increase its paid-up capital in the next period towards its authorized capital of 50 billion shillings.

Yatani in 2019 told Parliament that due to their different interpretations of what it should deliver, the CBK still had the state dividends amounting to billions of shillings.

At that time he was acting in the CS Treasury.

“The CBK has around Sh27 billion to be delivered to the Treasury. The CBK is not exempt from all other regulations of state agencies, ”Yatani told the Budget and Appropriations Committee of the National Assembly.

“Regardless of the investments they have made in Treasury bills and bonds, we have instructed that the principal and interest must be delivered to the National Treasury at the end of maturity,” said Yatani.

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