- Senators have asked the state to tame the running away graft and limit wastage to free up funds to clear the ballooning public debt.
- The development comes even as it emerged that the country’s debt level has hit 11.24 trillion or 69.7 million of the Gross Domestic Product (GDP).
Image: FILE
Senators have asked the state to tame the running away graft and limit wastage to free up funds to clear the ballooning public debt.
The development comes even as it emerged that the country’s debt level has hit 11.24 trillion or 69.7 percent of the Gross Domestic Product (GDP).
While debating in the chamber, the lawmakers said the country is heavily indebted but has nothing to show for it.
“Every African country is heavily in debt. There is nothing wrong with borrowing, so long as the money goes to what it was borrowed for?” Makueni Senator Dan Maanzo said.
Migori Senator Eddy Oketch raised concerns about the Treasury’s ‘habit’ of borrowing money to finance recurrent expenses.
“We are borrowing money, and it does not go to development. We are ranging between 65 and 68 percent of our national Budget going on recurrent budgets,” he said.
The lawmakers were debating a report of the Senate’s Finance and Budget Committee on the Medium-Term Debt (MTDs) Management strategy.
While tabling the report on the floor of the House, Mombasa Senator Mohammed Faki said that at the end of June 2023, the nominal amount of public and publicly guaranteed debt was Sh10.278 trillion, or 70.8 percent of the GDP.
This he said, comprises an external debt stock of Sh5.446 trillion and a domestic debt stock of Sh4.832 trillion.
According to the Treasury, the total stock of public and publicly guaranteed debt as of February 2024 was Sh11.24 trillion, or 69.7 percent of GDP which comprises external debt stock of Sh6.18 trillion and domestic debt stock of Sh5.05 trillion.
The foreign public debt is composed of multilateral (Sh3.118 trillion), bilateral (Sh1.399 trillion) and commercial (Sh1.67 trillion) while Eurobonds account for Sh1.141 trillion or 18 percent.
Domestic debt mainly comprises Treasury bonds and bills of Sh4.272 trillion in Treasury Bonds, accounting for 85 percent of total domestic debt, Sh565.63 billion Treasury Bills accounting for 11 percent and Sh220.16 billion, or 4 percent.
Others are Overdrafts from the Central Bank of Kenya (CBK), International Monetary Fund (IMF) Special Drawing Rights (SDR) and Allocation and Bank advances.
According to the report, as of the end of June 2023, the Government guaranteed debt to the Kenya Power and Lightning Company (KPLC), Kenya Ports Authority (KPA), Kenya Electricity Generation (KenGen) and Kenya Airways (KQ) Sh170.2 billion.
“The fiscal deficit for Financial Year 2024/2025 approved under 2024 BPS is Sh703.9 billion. This might come down because of the strengthening of the Kenya Shilling. The Medium-Term Debt Management Strategy (MTDS) proposes that this deficit will be funded by both foreign and domestic borrowing,” Faki said.
The net foreign financing will be Sh362.12 billion while domestic financing will be Sh377.75 billion.
“As a country, we need to manage our debt. The public debt is over Sh11 trillion. The National Treasury has indicated that they will reduce the nominal ratio from 70 percent to 65 percent in the next three to five years,” Elgeyo Marakwet Senator William Kisang’ said.
“One of the things that contribute to a high increase in debt is when you try to come up with an ambitious budget, then you have a budget deficit,” Vihiga Godfrey Osotsi said.