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Treasury Ordered to Close Ksh3.5 Billion Civil Servants Car Loans Account

National Treasury [Photo/Courtesy]

The National Treasury has at most three months to close a Ksh3.5 billion account held at Kenya Commercial  Bank (KCB), meant for car loans for public servants.

The funds have been lying idle in the account for years, and now the National Assembly’s Public Accounts Committee (PAC) wants the Treasury to speed up the allocations or reallocate the funds to more pressing issues.

“The Cabinet Secretary, the National Treasury should within three months of tabling and adoption of this report, roll out the fund to the State Officers and Public Officers in order to achieve the objective of providing motor car loans to the civil servants. If this is not possible, withdraw all the money plus interest deposited at Kenya Commercial Bank (KCB) and appropriate money into the Exchequer,” the committee ordered.

Read: How State House Order For Parastatals To Surrender Money To Treasury Will Cripple Economy – David Ndii

The account now holds at least Ksh3.5 billion, from last year’s Ksh2.83.

Most public servants have been avoiding the five-year car loan plan, since most of them earn peanuts which cannot allow them to endure deductions to service the loans.

A public service rule requires that after all deductions including loans, public servants should remain with at least a third of their gross salary. Deductions of the car loans could leave them with almost zero salary, a move that could inspire corruption for survival in the offices.

The servants can get at least Ksh600,000 and a maximum of Ksh10 million, in case they qualify for the loans.

“Although the amount has been confirmed to exist it could have been utilised for other more deserving cases in the government while the National Treasury continues to develop or create an enabling environment for the Fund’s operation,” adds PAC.

Read: Parastatals Ordered To Surrender All Cash In Their Accounts To Treasury

Despite developing a web-based loan application portal for public servant, Julius Muia, the Treasury principal secretary says that the ministry is still setting up structures and guidelines, the reason issuance of the loans has delayed.

“The scheme has since transferred funds to an interest-earning account with KCB as arrangements to start piloting of the set structures are being done with a view of improving the loan issuance guidelines,” he said.

The government has been under pressure to pull enough resources for its budget, after the Kenya Revenue Authority (KRA) failed to meet its target.

Recently, the National Treasury ordered parastatals to return their idle money to the government for utilisation.

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Written by Francis Muli

Follow me on Twitter @francismuli_. Email

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