According to David Ndii, Chair of the President’s Council of Economic Advisers, government salaries for civil officials in Kenya have been postponed this month due to an operational liquidity shortage.
Ndii noted on Citizen TV’s Monday Report that the government usually ensures even monthly maturities to obtain money to refinance bills and debts.
“…It is not alarming. I think it’s something people also experience if you think about it, there’s something people call the January effect… you went and spent money over Christmas. You have school fees in January, and then you also realize, Oh, my goodness, my car insurance issue is due… you probably buy health insurance and something else. Then your salary gets delayed So it’s just an operational kind of liquidity crunch,” said Ndii.
However, unusually heavy maturities in March, when the government paid Ksh.150 billion in maturing bonds and bills, as well as a couple of market movements caused by the US Treasury raising its rates and the Central Bank of Kenya raising the CBR by 75 basis points last week, have resulted in a market that is adjusting.
Ndii went on to say that the government had planned to raise a billion dollars from the foreign market last year, but they were too late and were unable to acquire money. As a result, the government concluded the year with a $120 billion deficit, affecting both the fiscal and liquidity sides of the economy.
He further says the government is currently trying to fill that hole by borrowing from the domestic market and is experiencing maturities that are bunching up, causing delays in civil servants’ salaries.
“The delay is not a crisis,” said Ndii.
He noted that the government is expecting $200 million from a syndicated loan and a further $300 million by the end of the week or the next.
He also assured civil servants that their salaries will be cleared by the end of next week. Although the delayed salaries are causing some concern among civil servants, Ndii urges them to be patient as the government works to resolve the issue.