Kenya Continues to Face Financial Distress amid Coronavirus Pandemic

The Kenyan government is struggling financially due to low revenue collections, a ballooning debt and the economic challenges of the COVID-19 pandemic.

On Monday, Interior CS Fred Matiang’i hinted at a pay cut for civil servants in a move to ease pressure on recurrent expenditure. In an interview, the CS admitted that although no one loves a pay cut, the government is facing a tough situation.

“All of us are going to be called upon to accept these extraordinary measures because we are dealing with extraordinary circumstances. If it comes to that (pay cut) so be it,” said Matiang’i.

The CS also added that some major development projects are going to be affected as the government cuts back on spending.

Concern is growing about the dire state of the economy. 

“No matter what obstacles stand in our way, nothing can stand in the way of millions of Kenyans yearning for change. We cannot continue with the level of national debts, cartels raping Treasury, government parastatals and our counties while our people languish in poverty,” Narok Senator Ledama Ole Kina said on Tuesday.

According to the Quarterly Economic and Budget Review by the National Treasury, for the first three months of the financial year 2020-21, the national government’s collection stood at Sh378.7 billion against a target of Sh428.9 billion.

This shortfall of Sh50.2 billion is attributed to underperformance in Pay As You Earn, value added tax (both domestic and imports), excise duty and import duty.

Low revenue collections threaten to stall operations both in the national and county governments. 

Treasury’s data shows that Sh357.1 billion was spent on recurrent budget between July 1 and September 30 against a Sh397.6 billion, indicating pending operational expenses in government offices.

The government spent Sh381.2 billion on recurrent budget in a similar period last financial year.