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Kenya: Treasury Spends Sh1.7bn On Loan Securing Charges

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4 years ago

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The Controller of Budget (COB) has flagged Treasury for Sh1.657 billion paid to secure future borrowing, saying the loans should be cancelled to ease the debt load on taxpayers.

Commitment fees are charged on borrowers for credit that has not been advanced and is a way of guaranteeing that a lender will keep the funds.

COB Margaret Nyakango told Parliament that the loans for 17 projects include expansion of the Jomo Kenyatta International Airport (JKIA), power connections, construction of a dam to ease water supply hitches to Nairobi and road construction.

Treasury paid the commitment fees for loans to Japanese, Chinese and European banks at the end of June piling pressure on the country’s ballooning debt.

Maturing debt

Nyakango’s call to drop the loan applications comes at a time Kenya’s maturing debt has piled pressure on the country’s expenditure plans and squeezed funds for development projects.

“We recommend that these loans should be canceled and this will reduce the loan book balance and consequently save tax payers payments on the commitment fees,” Mrs Nyakango told Parliament yesterday.

Treasury also committed Sh225.08 million to secure funding for installation of an underground power transmission line in Kileleshwa, Westlands, Parklands and Riverside estates and Sh21.447 million to secure funds for construction of a second runaway at the JKIA.

Fees to secure funds for an underground electricity transmission line to State House, Ngong Road and neighboring estates top the list at Sh393.8 million followed by Sh304.58 million for construction of phase two of the Ruiru dam.