Treasury CS John Mbadi Directs Budget Cuts for State Corporations
Treasury Cabinet Secretary (CS) John Mbadi has issued a directive for State Corporations to implement significant budget cuts targeting six major expense categories in the upcoming 2025/2026 fiscal year. This announcement, contained in guidelines released by the National Treasury on Friday, December 20, seeks to streamline public spending and align expenditures with essential mandates.
Expenses Targeted for Budget Reductions
State Corporations have been instructed to reduce their expenditure on the following non-core activities:
- Legal fees
- Traveling
- Training
- Seminars
- Consultancies
- Overtime
According to the circular, “The base for 2025/2026 FY expenditure estimates should be the approved rationalized budget for 2024/2025 FY with a minimal projected increase to cater for cost-of-living adjustment.” The directive emphasized scaling down all non-essential activities to the bare minimum.
Restrictions on Salary Increments and Borrowings
In addition to expenditure cuts, CS Mbadi cautioned State Corporations against unauthorized employee salary increments and loans. He underscored that any salary adjustments must receive prior approval from the National Treasury and the Salaries and Remuneration Commission (SRC).
“State Corporations are reminded that they should not procure any loan, overdraft facility, or any form of credit facility with a financial institution without prior approval of the Cabinet Secretary, Line Ministry, and the concurrence of the Cabinet Secretary, the National Treasury & Economic Planning,” Mbadi stated.
Policy on Defaulting Corporations
The National Treasury also clarified that it would not approve borrowing requests or grant guarantees for State Corporations in default on loan repayments or with outstanding pending bills. This move aims to reinforce fiscal discipline across public institutions and ensure better management of resources.
Conclusion
The directive by Treasury CS John Mbadi reflects the government’s commitment to prudent financial management and prioritization of core functions. As the 2025/2026 budget cycle approaches, State Corporations are urged to adhere strictly to these guidelines to foster sustainable fiscal practices and accountability in public spending.
