Job cuts and parastatal mergers only way to cut debt spending

Treasury CS Henry Rotich (PHOTO: Standard)

NAIROBI, KENYA: The government must cut public wage bill, the number of parastatals and cherry pick new projects if it is to manage the huge financing gap that has led to massive borrowing.

Economic Think-Tank Institute of Economic Affairs says tax revenues are no longer sufficient to meet recurrent spending and that the government should explore retiring its huge work force.

“The government needs to rein in on recurrent expenditure through a combination  of restricting none core spending, streamlining public service sector, employing retrenchment programmes and temporarily freezing employment,” said John Mutua IEA Programmes Coordinator during a post budget briefing in Nairobi.

Owing to expenditure growing at a faster pace than revenue, the government has been running widening deficits from 6.4 per cent in 2013/14 to 9.3 per cent in 2016/17.

Treasury is targeting a shortfall of 7.2 per cent this year and further lowering it to 5.7 per cent in 2018/19 to reduce the amount of money it is forced to borrow.

Mr Mutua said that on average, the wage bill was growing at twice the pace of the country’s Gross Domestic Product. The Wage bill grew from Sh375 billion to Sh549 billion a 10 per cent rise against 5.5 per cent GDP growth.

“Growth in the public wage bill is partly due to increased recruitment (662,300 in 2013 to 790,200 in 2017) and general increase in average wage earnings per public sector workers,” Mr Mutua said.

Mr Mutua called on the state to implement resolutions of the Capacity Assessment and Rationalization of Public Service (CARPs), a radical streamlining of the public service instituted by former Devolution Cabinet Secretary Anne Waiguru.