- Senators have placed tough conditions for the CS ahead of the expected request to Parliament by the Treasury to raise the cap to cater for budget deficit.
- They said they allowed Treasury’s request in 2019 to give the government some leeway to renegotiate debts for easy repayment.
Image: /JACK OWUOR
Treasury CS Ukur Yatani faces an uphill task to persuade Members of Parliament to increase the country's debt ceiling from the current Sh9 trillion.
Senators have placed tough conditions for the CS ahead of the expected request to Parliament by the Treasury to raise the cap to cater for budget deficit.
The CS has stated that he would soon be seeking Parliament’s nod to increase the cap that was last set by Parliament in October 2019.
However, lawmakers want Yatani to present a proper debt management strategy and clearly state purpose for borrowing before they entertain any request to raise the ceiling.
“We want to see a proper debt management strategy first before considering anything. Without seeing that, I am sure senators will be extremely hesitant to entertain any discussion on raising debt ceiling,” Nairobi Senator Johnson Sakaja said.
The senators said they allowed Treasury’s request in 2019 to give the government some leeway to renegotiate debts for easy repayment.
Unfortunately, the debts have neither been repaid nor renegotiated. Instead, the country has continued to sink deeper into debt.
“When they asked for the ceiling to go up last time, they said they would renegotiate some debts. They wanted headroom to renegotiate some debts. They wanted to convert the commercial loans to concessional ones,” Sakaja said.
Makueni Senator Mutula Kilonzo Jr said they will demand from the Treasury to always seek Parliament’s approval before committing the country to a debt.
“Even if we are incurring more debts, Parliament should have a role in the borrowing their government is making… they can’t just borrow for anything. They can’t borrow to go and pay paper,” the Senate Minority Chief Whip said.
The lawmakers made the demands as they criticised the Jubilee administration for its appetite for debt that is now taking a heavy toll on the country’s economy.
Minority leader James Orengo said the country’s debt portfolio is unsuitable and challenged the Treasury to come up with proper measures to arrest the growing concern.
“The idea of just coming with a figure of Sh9 trillion or Sh12 trillion and asking Parliament, if at all Parliament is requested, is no longer sustainable,” Orengo said.
“The debt crisis where we are is untenable. It is not something that is sustainable. If it was sustainable, then we could not be asking for debt rescheduling, which we asked for and were granted by some creditors.”
Public debt crossed Sh7.28 billion last December, an equivalent of 63.4 per cent of the gross domestic product, from Sh6.01 trillion or 58.0 per cent of GDP a year earlier.
“For now, the overall ratio indicates that Kenya's debts, that is, public and public guaranteed debts, to GDP ratio is at 63.4 and is moving towards breaching the threshold of 70.
“Therefore, we are almost there and that is a worrying situation. We do not want to get into a situation where we become a non-going concern because we are choked by debts,” House’s Finance and Budget Committee chairman Charles Kibiru said.
Speaking when moving a motion to debate a report of his committee on the consideration of the Budget Policy Statement presented by Yatani, Kibiru said Treasury would likely surpass the Sh9 trillion ceiling by 2022-23.
“The debt service as a percentage of revenue remains bridged into the medium term. The threshold is 50 per cent as per the law, but our country is at 54 per cent. This indicates liquidity shocks and debt service, which is a first charge and takes up a large amount of the revenue collected,” he said.