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President-elect William Ruto begins his term on a tight rope as government employees are set to lose Sh100 billion in allowances starting next month.

The salaries and remuneration Commission (SRC) set October as the month that the State aims to cap allowances at a maximum of 40 per cent of a public worker’s gross pay, shifting from the present unregulated model that inflates the workers’ take-home pay.

National Treasury had earlier committed to the International Monetary Fund (IMF) that the perks would be reviewed as part of conditions tied to the multi-billion shilling loan agreements that Kenya inked with the multilateral lender.

This, however, will likely meet opposition from the civil servants as the president-elect had already pledged to revise pay for the police service once elected.

Ruto who spoke in Juja during one of his campaign forays pledged that Kenya Kwanza administration will overhaul Kenya Police Service within 100 days and restructure their salaries. 

Improve the economy

“Within 100 days, we will improve their terms of service and salaries so that we help our officers to maintain security as we improve the economy,” he said. However, in the SRC structure, the civil servants will lose Sh2 billion weekly from the 247 allowances that different cadres of employees take home.

The State agency says that the remunerative and facilitative allowances account for 48 per cent of the State wage bill.

Lyn Mengich, SRC chairperson said the review of a policy that will guide allowances in the public service is complete and will see elimination and merger of some perks.

Alongside the traditional remunerable allowances, SRC pointed out that a number of institutions like university councils have been approving other allowances yet they do not have the mandate to do this.

The allowance cut and the freeze of pay increases until 2025 will dampen the civil servants’ prospects of better fortunes amid tough economic times with rising commodity prices. There are currently over 247 remunerative and facilitative allowances, up from 31 in 1999, payable within the public sector and they have the effect of doubling a worker’s monthly pay

As the new administration assumes office there are likely to be changes to the number of ministries or departments and their functions which in turn will affect their respective budgets.

The new administration is facing strict timelines as the PFM Act 2012 requires Treasury Cabinet Secretary to issue guidelines on medium-term expenditure framework by August 30. This will be followed by the launch of sector working groups made up of accounting officers from ministries, departments and agencies (MDAs) on September 9. Given tight timelines, Ruto might be forced to hinge the budget on plans set under the Jubilee administration which will possibly make it hard to implement his 100-day pledges.

Progress reports

Under the Treasury’s timetable ministries are given September 21 as the deadline to review and update projects for 2023/24 and prepare progress reports.

This, therefore, means that for pledges like the police salary increments to be implemented, Treasury will have to cut on some of the allocations to State ministries and departments.

They are then required to develop medium-term budget frameworks outlining budget estimates and policy priorities and prepare a draft budget review and outlook paper (BROP) by end of September.