The government is seeking radical changes to the finance law to hand the new Public Debt Management Office (PDMO) sweeping powers.
The move by President William Ruto's administration is aimed at giving the PDMO a bigger role in the management of the country's borrowing.
The National Treasury has approved the amendments to the Public Finance Management Act No. 18 of 2012 and has drafted the Public Finance Management (Amendment) Bill, 2023.
The amendments have been tabled in Parliament for processing as President William Ruto seeks to control the country's public debt.
Under the proposed amendments, the PDMO will also take over the additional powers including providing advisory on sustainable debt levels.
“The bill seeks to amend the Act by adding functions of the Public Debt Management Office to include advising Parliament and the Cabinet Secretary on the sustainable levels of public debt and the annual borrowing limit,” reads a notice published on Tuesday.
The notice was published by Treasury Cabinet Secretary Professor Njuguna Ndung’u at a time when the Kenya Kwanza government is working on plans to reduce the ballooning public debt.
Under the changes, the National Treasury Cabinet Secretary will be required to update Parliament in writing, whenever public debt exceeds the threshold set out in the law as well as the remedial plans.
“The principal object of this Bill is to amend the Public Finance Management Act to operationalize the public debt and borrowing with the provisions of the Constitution which define public debt to mean all financial obligations attendant to loans raised or guaranteed and securities issued or guaranteed by the national government,” said Ndung’u.
Currently, functions of the PDMO, which is headed by Haron Sirima, are limited to preparing key debt documents and policies such as updating the annual medium-term debt management strategy.
The office also acts as the principal in the issuance of government debt securities on behalf of the exchequer.
The PDMO is a directorate at the National Treasury headed by a director general reporting to the Treasury Cabinet Secretary and whose main objectives are minimising the cost of public debt management and borrowing over the long term taking account of risk.
Once the law is amended the PDMO will be promoting the development of market institutions for government debt securities and ensuring the sharing of the benefits and costs of public debt between the current and future generations.
