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Institute of Economic Affairs CEO Kwameh Owino. [File, Standard]
An economist has claimed corruption might be responsible for the country’s ballooning public debt and wage bill.

Institute of Economic Affairs Chief Economist Kwame Owino yesterday said that there is a high possibility the Government’s high debt portfolio and wage bill could be linked to ghost creditors and workers.

He said that in the next financial year starting July, the Government has provided for payment of Sh870.6 billion as interest on debts and debt redemption as well as Sh549 billion in wages and allowances.

However, Mr Owino argued that some of the money might end up in the pockets of non-existent persons.

Treasury has since disputed Owino’s figure of Sh870 billion bill, explaining that domestic bond redemptions are not part of recurrent expenditure.

National Treasury Principal Secretary Kamau Thugge said domestic debt redemption can either be amortised (reduced or paid in small regular payments) or rolled over.

“Debt redemption does not affect the Government’s cash flow,” Thugge told The Standard in a past interview.

Owino’s claims come at a time when the Government has intensified its war against graft, with a number of State officials already charged in court for swindling taxpayers.

He cited a case in which the Central Bank of Kenya and the Banking Fraud Investigations Unit were investigating forged 90-day Treasury Bills dated 1990.

The holders of the debt security were accused of presenting the certificates with the intention to cash them for Sh633 million.

“When we are spending Sh800 billion, it is very easy to hide an odd Sh600 million,” explained Owino.

When President Mwai Kibaki left office in 2013, Kenya was spending between Sh200 billion and Sh300 billion a year on debt repayment, according to the economist.

He called for an audit of the debt registry.

Owino also claimed that the Government’s payroll might be full of ghost workers.

The next big items that the Government spends on is wages, with the total wage bill in the 2018/19 financial year estimated at Sh549 billion.

Owino said there have been several reports pointing to the existence of ghost workers in the Government payroll.

A past article by our sister publication, Financial Standard, showed that despite pouring billions into extensive ghost-busting audits, Kenya remains largely a country of ghosts.

Just a few weeks ago, the World Bank advised the Government to purge ghost workers from its payroll to contain the run-away wage bill.

The global lender said that “cleaning the payroll of ghost and redundant workers” is the surest way to achieve austerity.

President Uhuru Kenyatta is on record expressing fear that ghost workers might be responsible for the inflated wage bill, with civil servants receiving Sh329.7 billion in salaries and allowances in the 2016/17 financial year.

In January 2014, Uhuru launched an aggressive campaign to smoke out ghost workers. Ghost employees, said the President, were siphoning about Sh1.8 billion from the public coffers annually.

“In the eight ministries partially audited, we have found evidence that a considerable number of officers who are either on secondment, are deceased, retired or have deserted their duties are still retained in the public service payroll,” he said in a statement.

corruption scandals wage bill debt crisis
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