President William Ruto on Tuesday admitted that March 2023 marked the first time in Kenya's history that civil servants' salaries were delaying to almost mid-month.
Delivering his speech on April 11 during the Public Service Performance Management Unit Launch at the KICC, Nairobi, Ruto said the situation was occasioned by heavy public debts and his decision not to borrow money to finance recurrent expenditure, largely salaries.
"We are well on course in running a stable economy that is not dependent on unnecessary, excessive borrowing... We will look for our taxes. I commend the Kenya Revenue Authority (KRA) which is at 95 per cent of their commitment in collecting revenue. KRA is doing a wonderful job in a very difficult terrain, where we have [an] experience of people [who are] not paying taxes. Everyone is going to pay," said Ruto.
"We will not continue with the old tradition of borrowing money to pay recurrent expenditure and to pay salaries. We are going to pay salaries from our own resources. We have moved our fiscal deficit to 5.7 per cent; our target is to take it to 5 per cent next year and 4 per cent the following year," he added.
Additionally, the president said he has instructed the National Treasury to review all the tax programmes ahead of the next budget reading in June.
"There are taxes we are going to reduce in the coming budget because some of them are punitive, and they encourage dodgy compliance," said Ruto.
The government has delayed paying March salaries for most of its public sector workers in a sign of a major financial crisis.
A section of civil servants and unions are now threatening to down their tools from next week.
The government needs at least Sh50 billion monthly for civil servants' salaries and Sh8 billion monthly for their pension.
"My economic advisors, led by David Ndii, have done something phenomenal in our country. They have managed to put together a programme that has taken us away from looking for $500 million (Sh65 billion) every month to fund fuel needs, which was snowballing into a crisis. Today, we can buy fuel in [Kenyan] shillings," said Ruto.
This, he said, will go a long way in strengthening the value of the Kenyan shilling against the US dollar.
"In a few months, the price of one dollar against the Kenyan currency will go below Sh120," said Dr. Ruto.