David Ndii, Chairperson of President William Ruto's Council of Economic Advisors, on Saturday, April 8, revealed the government could have faced a dilemma days before reports on salary delays surfaced.
Ndii, while responding to a series of concerns, indicated that President William Ruto's administration was in a fix on whether to pay the debt or suffer the consequences of defaulting.
Explaining the fix, the economists revealed that the government directed almost 60 per cent of the revenue collected to service debts.
Less than 40 per cent of the collected revenue was reserved for paying salaries and supporting other government expenditures.
Ndii further implied that cash resources were short in supply, whereas the demand was high from various sectors, including public servants.
Following the dilemma, Ndii asked whether Ruto should pay the loans or salaries.
"Is public finance that difficult? It's reported every other day debt service is consuming 60 per cent plus of revenue. Liquidity crunches come with the territory. When maturities bunch up, or revenue falls short, or markets shift, something has to give. Salaries or default? Take your pick," Ndii posed.
"Foreign debt is not the the issue. I'm talking about weekly maturities of domestic debt held by your banks and pension funds (80 per cent plus of debt service)," he further clarified.
However, Ndii revealed that Ruto approached him following his projection that Kenya would run broke due to debts, in 2014.
After winning the presidential election, he brought him to help his administration solve the cash crunch issue.
" I believe we can make a difference," he assured concerned Kenyans.
MPs Miss Salaries
The economic expert issued the clarification after several public servants, including members of parliament, raised concerns about salary delays.
On Friday, April 7, Minority Leader in the National Assembly Opiyo Wandayi claimed he had not received his March salary. The lawmaker accused Ruto's administration of failing to ensure public servants are properly and timely enumerated.
Further, Wandayi castigated the government, calling for an audit of its public coffers.
"For the first time in our history, even MPs have not been paid as we head towards mid-month.
"Only members of the security services - police and military - have been paid as we speak and the reason must be obvious to all," Wandayi claimed.
Besides MPs, the cash crunch affected Kenya Broadcasting Corporation employees. In a letter dated Wednesday, April 5, Chief Executive Officer (CEO), Samuel Maina, asked staff to exercise patience as the media house rushed to solve the crisis.
The CEO pledged to unveil strategies to cushion workers them and their families.
"Management regrets to inform you that we are unable to pay the March 2023 salaries before Easter Holidays due to unavoidable circumstances," Maina stated
Treasury's Stance
On February 8, Treasury Cabinet Secretary told MPs that the country was experiencing financial constraints affecting normal government operations.
He, however, maintained that the government was keen to address the cash crunch crisis.
"The government is like a home. Sometimes you may have needs but there is no money for that. However, when you work hard, you will finally get money to address your needs," he stated.
