The Central Bank of Kenya (CBK) confirmed paying KSh4 billion dividend to the National Exchequer Account on September 16 to the Consolidated Fund.
“The transfer (loosely known as ‘remitting of dividends’) was executed by crediting the Ministry of Finance’s Deposit Account at CBK,” said CBK in a statement Thursday.
The National Treasury maintains the Consolidated Fund in an account known as the National Exchequer Account, kept at the Central Bank of Kenya
“In making its determination (to remit Sh4 billion to Treasury), the CBK Board also considered CBK’s financial needs with the objective of ensuring CBK is well-resourced to deliver on its mandate.”
The dividend, from it’s General Reserve Fund (GRF), was a share of its net profit for the financial year to June 2019. However, it retained some of the net earnings that will be used in the production of the new currency.
The provision of new generation currency is in line with the 2010 Constitution. “CBK is mandated to issue new generation currency, with an expected cost of Ksh.15 billion.”
The regulator also said it would use the money to strengthen its financial position, including increasing paid-up capital to KSh50 billion.
“The increased paid-up capital strengthens CBK’s financial position, enabling it to pursue its functions even in times of stress and sustaining its financial independence.”
“Specifically, CBK will be better able to absorb losses that may arise from discharge of its functions; provide confidence that it will meet its domestic obligations; and cushion against shocks arising from price and exchange rate movements.”
What is a Consolidated Fund?
Article 206 of the Constitution establishes the Consolidated Fund in Kenya. This fund acts as the main bank account for the national government. The Public Finance Management (PFM) Act expounds on the Consolidated Fund.
(1) There is established the Consolidated Fund into which shall be paid all money raised or received by or on behalf of the national government, except money that–
(a) is reasonably excluded from the Fund by an Act of Parliament and payable into another public fund established for a specific purpose; or
(b) may, under an Act of Parliament, be retained by the State organ that received it for the purpose of defraying the expenses of the State organ.
(2) Money may be withdrawn from the Consolidated Fund only–
(a) in accordance with an appropriation by an Act of Parliament;
(b) in accordance with Article 222 or 223; or
(c) as a charge against the Fund as authorised by this Constitution or an Act of Parliament.
(3) Money shall not be withdrawn from any national public fund other than the Consolidated Fund, unless the withdrawal of the money has been authorised by an Act of Parliament.
(4) Money shall not be withdrawn from the Consolidated Fund unless the Controller of Budget has approved the withdrawal.