It’s been a long 220 days since Kenya inaugurated a new president. Although we predicted William Ruto would face a tough job, the burden seems even heavier. The administration has been under immense pressure for several matters, with finance taking the front seat.
Kenya’s government is facing a financial crisis. They have not paid their employees, including ministers, legislators, and civil servants, their salaries. Most county government employees and some civil servants have not been paid since January. This is the first time something like this has happened since Kenya gained independence in 1963. The problem is that the national treasury needs $434 million monthly to pay salaries and pensions, which they don’t have.
What’s worse is that it doesn’t look like this problem is going away in a whiff. Through its Treasury and Economic Planning Cabinet Secretary, Njuguna Ndung’u, the state recently gave civil servants a heads-up that they would need to “tighten their belts,” as the country has nowhere to get funds. Even Rigathi Gachagua, the deputy president, has conceded that the government has no money.
Now, the country is seeing a wave of strike actions among its workers, including doctors. These strikes are a sequel to a two-week-long protest that rocked Nairobi and other major cities. The protests were against the high cost of living and alleged fraud in last year’s vote.
Yet the administration is not doing enough to tame the fires, as it’s now playing the blame game. Gachagua laid the blame at the feet of the previous administration under Uhuru Kenyatta, pointing to its “big appetite for loans” as the root cause of the crisis. He also accused long-time opposition leader Raila Odinga of complicity in the matter, insinuating his role in bringing about the current state of affairs.
Kenya’s debts have become too heavy
The president’s chief economic adviser, David Ndii, said late salary payments were due to liquidity problems caused by the rising cost of servicing debts. He summed up the government’s predicament in a tweet: “It’s reported every other day debt service is consuming 60%+ of revenue. Liquidity crunches come with the territory. When maturities bunch up, revenue falls short, or markets shift, something has to give. Salaries or default? Take your pick,” he wrote on April 8.
As a proportion of ordinary revenue, the cost of servicing Kenya’s debt has risen from 49% in 2019/20 to 65% in 2022/23.
However, President William Ruto affirmed that the Kenya Revenue Authority (KRA) had done a ‘wonderful job’ of staying within revenue targets. “We are going to pay salaries from our own resources; we will meet recurrent expenditure using our own resources,” Ruto said on Tuesday.
Meanwhile, Ruto increased the number of senior government officials known as Cabinet Administrative Secretaries to 50, up from 29 under Kenyatta. This increase will cost taxpayers up to 13.2 billion shillings ($98.2 million) over five years, according to the country’s Public Service Commission. So his administration might still have a spending problem.