Early Retirement for Civil Servants and Teachers Due to Financial Crisis in the Government
Early Retirement for Civil Servants and Teachers Due to Financial Crisis in the Government. The government is considering layoffs and early retirement for its public servants in light of revelations that it is cash-strapped and may not be able to fulfill its pledge to pay its employees on time.
As of yesterday, hundreds of thousands of government and parastatal employees were still working without pay, with the exception of teachers and members of the disciplined services.
Njuguna Ndung’u, Cabinet Secretary for National Treasury and Economic Planning, issued a dire warning about impending hardships, claiming that the government is in a “financial fix” and has no other place to turn for additional funding as thousands of government workers endure unprecedented delays in receiving their salaries.
Prof. Ndung’u revealed the financial limitations the national government is experiencing, stating that it is caught between underperforming revenues and restricted access to capital due to dwindling borrowing headroom.
Without going so far as to state that the government is “broke,” he said that the situation has led to the stalling of a number of government initiatives, such as payments to the counties and investment projects, with the majority of the money going to debt finance.
According to Prof. Ndung’u, “The national government is caught between two extremes: high levels of debt financing and financing limits brought on by a lack of access to capital in both the domestic and global financial markets.”
President William Ruto’s economic adviser, David Ndii, stated that the government is considering laying off public employees in order to reduce the salary bill, which currently accounts for more than 60% of all revenues collected.
This means that in order to prevent the government from overspending on pay, teachers and other public employees who have reached the age of fifty and over will be forced to retire early.
It’s still unclear if teachers and government employees will receive an early payment of their retirement benefits.
Treasury needs roughly Sh50 billion per month on average for government worker salaries and another Sh8 billion per month for pension payments.
The delays have had an impact on a number of employees working for ministries, departments, and organizations, with the majority taking their Easter holidays unpaid.
Ministry of public Service website http://www.psyg.go.ke/
Some members dispute the assertion made by Kimani Ichung’wa, the majority leader of the National Assembly, last Thursday that MPs had begun receiving their pay that afternoon. The 26th to the 30th of each month is typically when the lawmakers get paid.
Senator Godfrey Osotsi of Vihiga stated Tuesday, “I have not noticed anything in my bank account, perhaps because I do not have an account with Cooperative Bank.
According to Peter Salasya, a member of parliament for Mumias East, this is the first time since the nation gained independence in 1963 that there is a pay crisis in the public sector.
Early Retirement for Civil Servants and Teachers
“We never experienced this, not even under [previous President Daniel arap] Moi. Also, it didn’t occur during the Covid-19 pandemic, which caused the world economy to take the heaviest hit of the twenty-first century, he added.
The Kenya Broadcasting Corporation (KBC) has also been impacted by the payment delay, with employees still waiting for their March paychecks.
The situation has been building for a while; according to sources, federal servants, including lawmakers and their staff, have been receiving their salary beyond the 30th day since the beginning of the year.
A KBC employee stated, “We always receive our salaries on the 27th of every month, but as of today, I have not seen anything.” We were paid between December 28 and 29 even though we are typically paid on the 15th.
The employee continued, even the State broadcaster’s news anchors, who are frequently given “wardrobe allowances” (money to buy clothes) in January and June each year, had not yet received the funds.
In an internal message to colleagues last week, acting KBC Managing Director Samuel Maina made clear the circumstance.
“(The) management regrets to notify you that owing to unavoidable circumstances, we will not be able to pay March 2023 salary prior to the Easter holidays. To guarantee that salaries are paid as soon as possible, we are working around the clock, stated Mr. Maina.
Chief Executive Officer Marjan Hussein Marjan of the Independent Electoral and Boundaries Commission (IEBC) informed staff that there are delays in the processing and disbursement of March salaries because Treasury has not given the organization a specific date when the money will be released despite its request on March 23.
The IEBC urgently needs cash, according to Mr. Marjan, who spoke before Parliament last week, in order to pay its suppliers for the elections in 2022 and get ready for next statutory and constitutional operations.
Obadiah Keitany, the deputy secretary of the commission, noted that although they had started making payments to selected vendors for the elections and by-elections in 2022, the Treasury had not yet released funds.
The MPS had requested answers from IEBC officials in order to address concerns regarding the delay in paying service providers and election officials for goods and services provided during the conduct of the 2022 elections and by-elections.
Late last month, National Treasury Principal Secretary Dr. Chris Kiptoo testified before the Senate County Public Investment and Special Funds Committee and claimed that the government was in financial trouble because the Kenya Revenue Authority had missed its most recent revenue target by a staggering Sh67 billion.
He said this has led to Treasury failing to raise cash for payout to counties and even to ministries, departments and agencies (MDAs) with county governments owed Sh92.5 billion in delayed January, February and March equitable revenue sharing remittances and Sh204 billion to MDAs.
Continuing expenses of Sh96.5 billion, development funds worth Sh55 billion, and pensions worth Sh53 billion, according to him, are still owed to MDAs.
The PS emphasized that the current cash shortage prevents the Treasury from paying off existing bills. Regulatory payments like pensions, which come first on the Consolidated Fund and use at least 65% of the money collected by the national government, are always given priority by Treasury, he continued. Dr. Kiptoo informed the committee that the Treasury, for instance, spent Sh150 billion alone in March to pay down the nation’s debt.
Between July 1, 2022, and February 28, 2023, the government received Sh1.83 trillion in taxes. Of of this, Sh727 billion (or 40%) went toward ongoing expenses, and Sh694 billion (or 38%), into public debt.
According to new data from the Controller of Budget (CoB), the government spent Sh526 billion between July and December 2022 to pay its domestic and foreign creditors. This represents a significant increase of Sh130 billion, or 32.8%, from the Sh396 billion spent during the same time period in the prior year. This came from the Sh952.6 billion that KRA had amassed during the time period under consideration.
The PS revealed the Treasury will “receive good amount of money from the World Bank” next month, but noted that they are working hard to increase revenues through tax administration and tax compliance.
Although things are not going well, Mr. Kiptoo added, “We are working nonstop and believe that by April and May we will be in a better position.”
Staff in county governments have been hardest hurt by the financial crisis. Many workers in at least 20 counties reported not receiving a paycheck for two months, while other counties had not yet paid March salary.
Some of the worst-hit counties include Tharaka-Nithi, Kirinyaga, Nyandarua, Marsabit, Murang’a, Laikipia, Kakamega, Bungoma, Busia, Vihiga, Nymira, Kisii, and Kisumu. Early childhood development and education teachers as well as healthcare professionals have yet to receive their pay for February and March.
The head of the Presidential Council of Economic Advisors, Dr. David Ndii, defended the administration while blaming a number of loans with billion-dollar maturities and a slow growth in revenue for the financial crisis.
Kenya continues to be at significant risk of debt distress after the public debt reached the Sh9 trillion mark in December. In the current fiscal year, the government intends to borrow Sh720.1 billion, which could cause the public debt to surpass Sh10 trillion by June 2024.