Low revenue collection, a ballooning debt and the economic challenges of Covid-19 have plunged Kenya into a cash crunch, with all indications clear that the government is struggling.

On Monday, Interior CS Fred Matiang'a hinted at a looming pay cut for civil servants in a desperate move to ease pressure on recurrent expenditure, weighed down by dwindling domestic revenue collections.

In an interview with a local TV station, Matiang'i 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," Matiang'i said.

He added that some of the major development projects are going to be affected as the government cuts back on spending.

His sentiments were the closest admission by a senior state official of a cash crunch in the Jubilee administration that has turned to borrowing for survival amid low revenue collection.
https://www.the-star.co....ress-government-admits/

Central Bank data show that public debt reached Sh7.12 trillion as of September – an increase of Sh1.2 trillion over the same period last year.

Of these, about Sh835 billion has been borrowed since the virus was first declared in March, going up to Sh909 billion, factoring in principal arrears and accrued interest.

Treasury is yet to release more than Sh300 billion to counties as a result of dwindling revenue from taxes.

Yatani sought to allay fears the state was doing badly in terms of cash-flow, dismissing those assertions as "speculation".

However, the CS conceded that revenue has fallen below target. “Of course, you understand we are in an abnormal situation.”

“There is low business performance and revenue is also falling below target [and] we have an option of reducing expenditure. That does not necessarily mean there is stress,” he told the Star.

“Our debt level is sustainable; we are meeting our obligations as required; we are running efficiently as a government,” he added.

The CS explained, "We may be slightly low on revenue performance but that does not mean the situation is bad.”
https://www.the-star.co....ail-out-state-agencies/

Who will be incharge? WSR?