NAIROBI, Kenya, Jun 13 – The National Treasury has undertaken to institute radical reforms in a bid to tame the rising public wage bill and reduce pension budget which has recorded a threefold increase in the last decade.
Treasury Cabinet Secretary Henry Rotich indicated in his budget statement on Thursday the government had embarked on a process of revalidating some 270,000 pensioners whose monthly dues will cost exchequer Sh86 billion in the current financial year up from Sh25 billion in the 2008/09 fiscal year.
“The increase in the pension budget over the years is unsustainable. Between February and May we conducted a payroll cleansing exercise for pensioners to authenticate recipients of monthly pension payments,” Rotich outlined during the budget presentation at the National Assembly.
Other measures instituted by the National Treasury include the restriction of public service hiring and the cleaning up of ghost workers from the public service wage bill which accounts for a significant portion of the national governments Sh1.8 trillion allocation in the Sh3.02 trillion 2019/22 financial year budget.
“In order to contain the wage bill I propose that we limit strictly the extension of services for the significant number of civil servants who are retiring at the age of 60. We will restrict new recruitment to key technical staff, security personnel and health workers,” the Treasury CS pointed out.
Rotich said the National Treasury will soon roll out a comprehensive pension policy that will provide a roadmap to sustainable government spending on wages and pensions.
The draft policy, he said, will be rolled out in the 2019/20 financial year with a clear guideline for the management of the pension budget.
“The National Pension Policy and Public Service Superannuation Scheme will ease the pension burden on the exchequer and free resources for other critical national priorities,” he said.
The National Treasury which is also aiming at lowering the budget deficit to 3 per cent in the medium term, said the government will access all projects before committing funds to ensure value for money.
Budget deficit as a percentage of Gross Domestic Product (GDP) under the 2019/20 budget declined to 5.6 per cent, from 6.3 per cent under the 2018/19 financial year Sh3.07 trillion budget with the taxman expected to raise Sh2.1 trillion.
The lower funding gap is attributed to the reduction of the 2019/20 budget by 4.2 per cent compared to the 2018 budget and reduced allocations for Consolidated Fund Services (CFS) which will now stand at Sh962.6 billion compared to Sh805.8 billion in the 2018/19 fiscal year.
Sh696.6 billion will be deployed to finance public debt servicing costs accounting for 86 per cent of CFS spending.
The 2018/19 budget has a shortfall of Sh607.8 billion out of which Sh324.3 will be financed through external borrowing while Sh289.2 billion will be raised through domestic borrowing.
Key expenditure areas in outlined in the budget include President Uhuru Kenyatta Big Four development agenda of food security, affordable housing, universal healthcare and manufacturing which has been financed to the tune of Sh450 billion, representing 14.6 per cent of the total budget.
The implementation of agriculture, manufacturing, universal health and affordable housing projects are expected to cost the government Sh55.77 billion, Sh125.4 billion Sh82.8 billion and Sh103.2 billion in the medium term.
Parliament’s budget capped at Sh43.8 billion with Judiciary set to receive Sh18.9 billion.
County governments have been allocated Sh372.6 billion with Sh5.8 billion set to be channelled to the Equalization Fund.
In nominal terms, the 2019/20 budget as share of GDP reduced to 28 per cent compared to 32.4 per cent in the current fiscal year.
