National Government’s wage has exceeded the budget by nearly Ksh16.55 billion resulting from fresh appointments by President William Ruto’s administration.
Data published by the National Treasury reveals that expenditure on salaries and wages amounted to slightly over Ksh152.63 billion between January and March, surpassing the target of Sh136.09 billion.
The 12.16 percent over-expenditure occurred during the period when President Ruto was finalizing the reconstitution of his government through key appointments.
For years, Kenya has struggled with a growing public sector wage bill, which has limited funds for development, leading to increased borrowing for both capital projects and salary payments.
President William Ruto has made a commitment not to borrow funds for recurrent expenditures, including salaries and the operation of government offices. This policy has resulted in delays in salary payments for some public servants in March, as the government prioritized debt repayments due to underperformance in tax collections.
“Some characters thought I was joking when I told them, ‘Listen, we are going to live within our means,'” stated President Ruto during a media engagement session last Sunday. “Even if we are going to delay salaries for two, three days, we will do so to make people understand that we cannot continue borrowing for recurrent expenditure.”
The Kenya Kwanza administration has faced challenges in implementing austerity measures aimed at reducing the recurrent budget by up to Ksh300 billion, with the goal of bringing financial stability to the country. However, concerns have been raised about policymakers’ ability to significantly tighten fiscal measures, given the historical track record of sustained improvements in key fiscal metrics.
Additionally, it remains unclear to what extent the Ruto administration can achieve additional expenditure savings beyond one-off major items, such as the petrol subsidy scheme.
President Ruto’s administration has expanded the executive arm of the government, increasing state departments from 44 to 51, and appointing 50 chief administrative secretaries (CASs) whose assumption of office has been suspended by the High Court.
The increased wage bill during the review period, amounting to Ksh13.38 billion or 9.61 percent more than the previous year, has put significant pressure on government revenue, particularly due to the rise in debt repayment.
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As a result, expenditure for the nine-month period through March exceeded the budget by almost Ksh12.20 billion, marking the first budget overshot for that period in nearly a decade.
The pressure on public finances will continue to mount in the coming months as approximately 35,550 teachers, hired at the beginning of the year, start receiving salaries. Furthermore, additional hiring in crucial sectors such as security and health will contribute to the burden on taxes. The government had maintained a moratorium on new civil service employment since December 2013, limiting hiring to essential sectors to control the public wage bill.
To lower the public sector wage bill and allocate more funds to development projects, the Salaries and Remuneration Commission (SRC) implemented measures in 2021, capping allowances at 40 percent of gross monthly pay.
This change aimed to ensure that basic salary accounts for at least 60 percent of the gross monthly pay, shifting away from the previous unregulated model where allowances accounted for a significant portion of public servants’ take-home pay.
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