Nairobi — National Treasury Cabinet Secretary Njuguna Ndung’u has warned of a looming delay in processing of salaries for civil servants.
Ndung’u claimed that the national government is experiencing financial difficulties as a result of underwhelming revenue growth and constrained access to capital because of dwindling borrowing capacity.
“The national government is forced to choose between two extremes: high debt financing levels and financial limits brought on by limited access to credit in both the domestic and global financial markets,” he said.
The CS further disclosed that the exchequer is in a financial mix and government employees from ministries and state agencies will have to wait for their April salaries with a majority of them going for their Easter holidays without pay.
His sentiments come only a day after deputy president Rigathi Gachagua made it known that the government is facing challenges paying salaries owing to fast-maturing debt obligations, attributing the delay in civil servants’ salaries to maturity of debts whose payment the government prioritized.
Civil servants monthly pay accumulates to Sh50 billion and Sh8 billion for payments of pensions. As of March 2023, the National treasury had accumulated debt repayments of Sh150 billion.
National Treasury Principal Secretary Chris Kiptoo who appeared before the Senate County Public Investment and Special Funds Committee towards the end of March 2023, disclosed that the government is experiencing a financial pinch after Kenya Revenue Authority (KRA) failed to achieve its revenue target of Sh67 billion.
The state had amassed Sh1.83 trillion in terms of collections from deposits for income taxes, customs charges, governmental service fees, fines and loan repayments.
Out of this, Sh727 billion which represents 40 per cent of the collections, went toward ongoing expenses while Sh694 billion or 38 per cent went into public debt.
The cash crunch comes after the government, through the cabinet, replaced the nominal debt ceiling of Sh10 trillion with a debt anchor set at 55 per cent of Gross Domestic Product (GDP) after the country breached its public debt ceiling by hitting Sh9.145 trillion ($73 billion) in December 2022.
