Treasury targets Sh1.03tr to repay public debt, clear pension backlog

Friday, June 12th, 2020 00:00 |
Pension plan.

At least 38.5 per cent or Sh1.03 trillion of the projected revenues in the  financial year 2020/21 will go to payment of public debt, pensions and other gratuities, salaries and allowances of constitutional office holders.

The funds which are withdrawn directly from Consolidated Fund Services (CFS) are used to pay mandatory obligation such as debt and cannot be changed in any given year without major legal reforms.

National Treasury Cabinet Secretary Ukur Yatani said Sh904.7 billion will be withdrawn from the CFS in 2020/21– which is an increase from Sh768.8 billion in 2019/20, while pensions and other gratuities will jump from Sh92.5 billion in 2019/20 to Sh119.2 billion in the 2020/21.

Other items which will also be withdrawn from CFS include Sh463.11 billion charged as interest, Sh441.6 billion charged as redemption, Sh4,15 billion will be charged as and salaries and allowances, while Sh15.5 million will be withdrawn as miscellaneous services.

Ordinary revenue

Johnson Nderi, Corporate Finance and Advisory Manager at ABC Capital Ltd said items classified under the CFS are charged first on the budget and are met from ordinary revenue.

He said that although pension and other gratuity was a concern during the 2020/21 financial year, the public debt is the biggest headache thereby subjecting the country’s development prospects into limbo.

John Kirimi said what this means is that the government will have to borrow more to cover their other expenses apart from the CFS expenses.

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