High recurring expenditure a concern as budget draws closer
12 June 2014, 14:07
Nairobi - A high wage bill, which takes up just over a third of the annual budget is still the main concern for many as budget day 2014 beckons.
When Treasury secretary Henry Rotich takes to parliament buildings Thursday afternoon to present his budget estimates, there will be lots to look forward to, just not the wage bill.
The public wage bill takes upto a third of the whole budget, which means that close to KES 370 billion will go to public servants pockets in the coming year.
It has been a topic that has raised concern in the past year, with the government trying out various measures to slow down the growth of a wage bill that has gone out of control.
The worrying bit is that the wage bill has risen significantly from the 2012-2013 budget, which stood at KES 222 billion.
According to experts, the growth of the wage bill has put pressure on other sectors of government to supplement the increased payments to public servants, thanks to new agreements made between doctors, nurses and teachers.
The challenge is how to reduce recurring expenditure and build on development expenditure.
" It is a problem for the government because we are seeing an ever ballooning wage bill and an ever reducing one for development, Isaac Musiany an expert at the Capital Markets Authority says.
This is made even worse by donor cuts and slow facilitation of aid from donors, which the government wholly depends on to fund development agendas.
County governments too have added to the quagmire with the increased numbers of staff at the localized level.
" We have seen the county governments bring in their own people in places where there can either be outsourcing or other measures taken to slow down the wage bill, Musiany adds.
The ficus though will shift to how the government secures extra funding to aid the budget, with the pre-planned Euro Bond float set to be moved forward by the government.
It is expected that of the close to KES 1.8 trillion budget, there is a deficit of around KES 200 billion.
That will be made even worse by the performance of key sectors such as agriculture and tourism that have been hit by factors such as terrorism.
Traders have said previously that if Kenya secures strong demand for its debut Eurobond, which it is now marketing to investors abroad, the shilling, which is struggling badly could get a boost.
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