MPs give Treasury six months to table debt cut proposals

The National Treasury is expected to submit to Parliament within six months a legislative proposal on how the country will manage its public debt.

It is also expected to operationalise the debt management module within the Integrated Financial Management Information System (Ifmis). 

These are some of the recommendations by a parliamentary committee in a detailed report on the country’s debt crisis.

The report by the Standing Committee on Finance and Budget indicates that the country’s debt ceiling of Sh9 trillion as determined by the Public Finance Management Act (PFM), 2012 has been surpassed.

As at June this year, Kenya’s total debt stood at Sh7.71 trillion, the report indicates.

“Furthermore, there are additional undisbursed loan commitments amounting to Sh1.31 trillion, bringing the amount of disbursed and undisbursed loan commitments to Sh9.02 trillion,” says the committee.

The report dated October 12 further recommends that within 28 days, Treasury should provide a status report on the restructuring of public debt as indicated in the review of the debt ceiling in October 2019.

“The Office of the Auditor-General should undertake a special audit on the utilisation of all commercial loans in Kenya to ascertain adherence to Section 15(2)(c) of the PFM Act, 2012 and submit a report to Parliament,” the report adds.

The PFM Act states that borrowed funds should only be used to finance development expenditure, but this has not always been the case.

“In 2020-21 financial year, the National Treasury utilised Sh61.5 billion of the Sh70.17 billion from sovereign bond proceeds on payment of recurrent expenditure,” the report says.