Let us have a look at teachers’ salaries and benefits in Kenya. During the first quarter of FY 2021/2022, the National Government had an approved budget of Ksh. 3.64 trillion out of which Ksh. 1.27 trillion is recurrent expenditure and Ksh. 669 billion for development.
The national government budget is financed through revenue at Ksh. 2 trillion including grants (62 billion), Appropriations in Aid and of course a deficit of Ksh. 929.7 billion. The deficit will be funded through domestic and foreign financing of Ksh. 658 billion and Ksh. 271.2 billion respectively.
During the first three months of FY 2021/2022, Ksh. 782 billion was receipts into the Consolidated Fund. The Consolidated Fund is an account at the Central Bank of Kenya where all state revenues are deposited.
The National Government total expenditure during the period was Ksh. 631 billion out of which Ksh. 112 billion was spent on development projects while Ksh. 519 billion was recurrent expenditure. During the same period in FY 2020/21, the national government had spent Ksh. 172 billion on development hence a decline in expenditure.
The national government spent Ksh. 122 billion of the recurrent expenditures on paying salaries, wages and benefits to civil servants, Ksh. 66 billion on operations and maintenance and Ksh. 88 billion on Current Transfers.
The Teachers Service Commission (TSC) recorded the highest expenditure on salaries and wages (compensation of employees) at Ksh 67 billion which is 54.8 percent of the total spending on compensation of employees by the national government.
Compensation of employees comprises of payment of basic salaries, personal allowances, wages to temporary employees among other payment to staff.
Just like in the counties, the national government delayed in settlement of pending bills, the National Treasury failed to adhere to the cash plans and forecasts when disbursing funds and the allocations were not aligned to the “Big Four Agenda.”
The national government of Kenya is heavily reliant on tax revenue. Hence, the fortifying the importance of taxpayers in any government. However, they are not treated with the same respect and decorum. During the first three months of 2021/22, tax revenue contributed Ksh. 416 billion to the Consolidated Fund. This was followed closely with domestic borrowing which contributed Ksh. 306 billion to the fund.
In terms of development expenditure, the State Department for Infrastructure spent the highest during the first three months of 2021/22 at Ksh 46 billion followed by the State Department of Planning at Ksh. 10 billion and the National Treasury closes the top three big spenders with Ksh 7 billion.
From the budget implementation reports, it is clear that the national government is skewed towards domestic borrowing. During the first three months of the FY 2021/22, domestic borrowing contributed 39 percent to the revenues available for spending. Anyone who has been to Economics class knows that heavy domestic borrowing has a crowding out effect on the local business. This is because the banks and other financial institutions will prefer to lend their money to government because it is the least likely to default in repayment. That means that business will not have access to loans when government is competing with them.
Public Debt
The stock of public debt as at 30 Sep 2021 was Ksh. 8 trillion out of which 51 percent was due to external lenders and 49 percent was due to domestic lenders.
Repayment of public debt has the first charge on the Consolidated Fund Services (CFS). The fund is also used for repayment of government-guaranteed loans to parastatals, pensions and gratuities, salaries and allowances to Constitution Office holders and subscriptions to International Organizations.
For the above purposes, a total of Ksh. 1.33 trillion was allocated to CFS in FY 2021/22 an increase from Ksh. 1.03 trillion allocated in FY 2020/21. The increase is due to the growth of public debt, pensions and gratuities.
A total of Ksh. 238.9 billion was made available for repayments of public debt, Ksh. 36.4 billion for pensions and Gratuities and Ksh. 739.6 million for payment of salaries and allowances to constitutional office holders. Making it a total of Ksh. 276.1 billion to the CFS compared to Ksh. 165 billion for a similar period in 2020/21.
BUDGET PERFORMANCE
The total available funding in the first three months of FY 2021/22 was Ksh. 675 billion.
Pending Bills – outstanding financial obligations
As at 30 June 2021, 17 MDAs reported their pending bills as Ksh 56 billion. A total of Ksh. 3.8 billion was paid during the first three months of 2021/22. However, Ksh. 100 million of the pending bills was considered ineligible.
The largest source of pending bills are National Youth Service (15 B), State Department for Crop Development (11 B), State Department for Transport (6 B), State Department for Wildlife (2.6 B) and IEBC (2.2 B).
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