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State Enterprises: PM Calls For Better Performance

The press release following the Cabinet meeting of Thursday 25 February 2016:

“The Prime Minister, Head of Government, His Excellency Philemon YANG, this Thursday 25 February 2016 chaired an important Cabinet Meeting at 9 am at the Prime Minister’s Office. The meeting was attended by the Vice Prime Minister, Ministers of State, Ministers, Ministers Delegate and Secretaries of State.

The management of public institutions and public and parastatal companies were at the centre of discussions. Two statements were made to this effect:

1. The first was on “performance in the management of State public administrative institutions, State-owned companies and mixed economy companies”, by the Minister Delegate at the Ministry of Finance;

2. The second was on “the balance sheet of the implementation of contract plans signed between the State, public administrative institutions, State owned companies and mixed economy companies”, by the Minister Delegate at the Ministry of the Economy, Planning and Regional Development.

The Minister Delegate at the Ministry of Finance noted that the portfolio of State owned companies and institutions is composed of 127 organs, that is, 86 public administrative institutions, 24 State owned companies and 17 mixed economy companies.

After recalling the legal and institutional framework of the exercise of the activities of these institutions and companies, the Minister Delegate dwelt on the debt situation. To this end, he noted that the debts of these organs include endorsed or retroceded debt by the State, as well as other commercial and wage debts.

He then indicated that the increase of this debt in the medium term could pose a risk to the State budget. To reduce this risk, the Minister Delegate advocates, besides the commitment to budgetary discipline, control of operating expenses, the implementation of various management tools and the improvement of governance and use of modern instruments for performance evaluation as financial rating.

Moreover, for greater efficiency, companies should rely less on subsidies from the State budget and expand their funding tools by turning to new formulas as non-sovereign loans from development partners or private banks.

Following this statement, the Prime Minister instructed the Minister of Finance to finalise compliance of Law No.99/016 of 22 December 1999 on the general status of public institutions and public and semi-public companies with supranational law and complete the Public Enterprises Monitoring Computer System (SISEP), with a view to extending it to all semi-public organs of the State.

Deliberations continued with the statement of the Minister Delegate at the Ministry of the Economy, Planning and Regional Development on the “implementation status of contract plans signed between the State, public administrative institutions, State-owned companies and mixed-economy companies”. From the outset, he placed contract plans in line with performance contracts and contracts with minimum objectives.

He indicated that to date, 34 contract plans have been signed, among which 22 in 2013, 10 in 2015 and 2 in 2016. With regard to finance, between 2013 and 2015, the State’s budget appropriations earmarked for rehabilitation helped to mobilise 57.4 billion FCFA for public institutions and beneficiary companies. The ministries in charge of monitoring the said companies provided 19.4 billion FCFA.

The Minister Delegate further presented difficulties hindering the effective implementation of the said contracts – the inadequate maturation of projects, slow procurement procedures or difficulties faced in carrying out transactions with service providers abroad are factors that explain why the financial implementation rate of contract plans hardly reaches 50%.

The Minister Delegate finally indicated that contract plans constitute a temporary instrument to revive the activities of an enterprise, the use of which cannot be perpetuated at the detriment of a clearly defined strategy.

After taking note of this report, the Head of Government instructed the Minister of the Economy, and of Finance to propose, as soon as possible, corrective measures likely to improve the efficiency of contract plans, from the 2016 budgetary year. He also recommended the strict respect of guidelines of the President of the Republic, which prohibit the mobilisation of rehabilitation credit in section 93, for the benefit of other entities other than public administrative institutions, State-owned companies and mixed-economy companies.

Finally, the Prime Minister instructed that the allocation of budgetary resources from sections devoted to holdings, contributions and rehabilitation funds in section 93 of the State budget should be rationalised.

The Cabinet meeting was adjourned at 11am./-”

 

Yaounde, 25 February 2016

(s) Séraphin Magloire FOUDA,

Secretary General,

Prime Minister’s Office

 

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