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Treasury seeks Sh122billion as wage bill load gets heavier

By By James Anyanzwa | February 12th 2014

By James Anyanzwa

Kenya: The National Treasury is seeking parliamentary approval to spend an additional Sh121.8 billion on Government operations until June 30, with most of the funds going towards payment of salaries and allowances for public officers.

And with the Government revenue collections performing below expectations, Cabinet Secretary Henry Rotich has resorted to borrowing and rationalisation of expenditures to free the funds needed to bridge the financing gap.

As a result, the revised budget for the 2013/2014 financial year is expected to increase to Sh1.67 trillion from the approved estimates of Sh1.65 trillion.

“The expenditure pressure is unprecedented and considering the already existing challenges in enhancing revenue measures, we have considered borrowing and budget rationalisation measures to close the financing gap,” said Rotich.

The highlights of the supplementary budget, which were tabled before the Parliamentary Budget and Appropriation Committee yesterday, proposes to reduce the development budget for the current financial year by Sh10.5 billion and increase recurrent spending by a colossal Sh54.8 billion. Among key measures that the National Treasury has adopted to generate additional funds in this financial year include rationalisation of non-productive expenditures and slow moving projects (Sh8 billion), carry overs financed from the existing budget (Sh16 billion), deferred contributory pension scheme (Sh6.9 billion), and savings from the consolidated fund services (Sh7.3 billion).

New recruitment

Others are sovereign bond/domestic borrowing (Sh33.5 billion), enhanced revenue measures (Sh3.9 billion), foreign financing (Sh16.6 billion), reallocation (Sh600 million) and rationalisation of strategic interventions (Sh29 billion).

Rotich, who was accompanied by his Principal Secretary Kamau Thugge, said additional spending related to salaries and allowances coupled with underperformance in revenue collections remain a big challenge to the Government. Rotich said the Cabinet has approved stringent measures to contain the spiralling wage bill in the public sector.

This he said include freezing of new recruitment except for essential services, down and right-sizing of the workforce and suspending re-classification and creation of new parastatals.

“The rising wage bill is crowding out resources for essential services and economic development,” Rotich told the committee headed by Mbeere South MP Mutava Musyimi in Nairobi yesterday.

“The expenditures need to be contained to enable us live within the available resources and adhere to the fiscal responsibilities outlined in the Public Finance Management Act 2012.”

He said though the Government had prioritised to implement strategic projects to enhance food security and improve railway network, these projects did not commence immediately as anticipated.According to the National Treasury, continued reforms in expenditure management and tax will create fiscal space for spending on infrastructure and other priority development programmes.

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