Phased Payment of Salaries to Public Servants Looming
A top government official has revealed that public servants could earn their salaries in phases should the cash crisis facing the government persist.
It’s not clear what it means when salaries are paid in phases.
David Ndii, who is the Chair of the President’s Council of Economic Advisers, says its normal for governments to be into current like financial situation.
Ndii however assured civil servants who are yet to be paid that their salaries will be cleared by the end of next week.
He said the government is currently trying to fill its deficit by borrowing from the domestic market. “The delay is not a crisis,” said Ndii.
Ndii said government salaries for civil servants in Kenya have been delayed this month due to an operational liquidity crunch.
Speaking on Citizen TV’s Monday Report show,Ndii explained that the government typically ensures even monthly maturities to raise money to refinance bills and bonds.
“It is not alarming. I think it’s something people also experience if you think about it, there’s something people call the January effect…you went and spent money over Christmas. You have school fees in January, and then you also realize, Oh, my goodness, my car insurance issue is due you probably buy health insurance and something else. Then your salary gets delayed so it’s just an operational kind of liquidity crunch,” said Ndii.
However, unusually heavy maturities in March, where the government paid Ksh.150 billion of maturing bonds and bills, and a couple of market movements caused by the US Treasury raising its rates and Central Bank of Kenya raising the CBR by 75 basis points last week, have created a situation where the market is adjusting.
He noted that the government is expecting $200 million from a syndicated loan and a further $300 million by the end of the week or the next.
Although the delayed salaries are causing some concern among civil servants, Ndii urged civil servants to be patient as the government works to resolve the issue.
Ndii’s remarks comes at a time when the government has warned its public servants to brace themselves for more salary delays amid a worsening economic situation in the country.
National Treasury and Economic Planning Cabinet Secretary Njuguna Ndung’u warned of tough times ahead, saying, the government is in a “financial fix” with nowhere to get more funds.
Prof Ndung’u said the national government is facing financial constraints as it is caught between underperforming revenues and limited access to finance due to narrowing borrowing headroom.
Stopping short of saying the government is “broke”, he said the situation has seen several government programmes stall, including disbursement to the counties and investment projects with most of the funds going towards debt financing.
“The national government is caught between two extremes; high level of debt financing and financing constraints due to limited access to finance in the domestic and international financial market,” said Prof Ndung’u.