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September 19, 2018

MP proposes changes in law to put ceiling on national debt

Alexander Kosgey- Emgwen MP on January 5,2015.photo file
Alexander Kosgey- Emgwen MP on January 5,2015.photo file

Uncontrolled borrowing by the government may end if a bill setting the ceiling of the country's debt at Sh6 trillion goes through the National Assembly.

Emgwen MP Alex Kosgey is seeking an amendment to the Public Finance Management Act to have the House cap the country's borrowing.

Currently, the law empowers MPs to clear any borrowing by government but does not set a ceiling.

The current national debt stands at Sh5 trillion, inclusive of domestic and foreign borrowing and if the Kosgey's proposal sails through, the government will only be left with a Sh1 trillion borrowing window.

"The proposed bill is to amend the Public Finance Management Act to provide for a specific limit of the amount that the government may borrow in order to reduce the country's external and internal debt," reads the Bill.

If enacted into law, the National Treasury Cabinet secretary will have to alert the House about the government's intention to borrow, the amount to be borrowed and the intended purpose of the funds sought.

Treasury will also have to furnish MPs with a detailed analysis of the risks associated with the proposed borrowing and the mitigation plan.

Currently Kenya's national debt stands at 57 per cent of the GDP, putting it ahead of the other East African countries. It is followed by Burundi at 55 per cent, Uganda 40 per cent and Rwanda 39 per cent while Tanzania has the lowest ratio in the region at 38 per cent.

Briefing journalists on the amendment, Kosgey said the ballooning national debt i increasingly becoming a burden to taxpayers.

“The current level of the national debt means that every Kenyan, adult or young owes lenders approximately Sh120,000 and the figure is rising,” he said.

He said for every Sh10 that the government raises in tax from Kenyans, Sh7 goes in repaying the national debt.

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