MPs have faulted the National Treasury for spending billions of shillings as commitment fees for loans that take inordinately long to be disbursed.
A report by the National Assembly’s Public Debt and Privatisation Committee shows that taxpayers are losing billions with projects stalling as the entities delay to disburse the funds.
The report focusing on loans contracted by the government between May 2022 and April 2023 was tabled by the committee chairman Balambala MP Abdi Shurie.
The committee revealed that during the period, the Treasury contracted 19 externally financed loans amounting to Sh213.24 billion.
The loans were signed between the national government and international creditors.
Some six loans amounting to Sh105. 06 billion were contracted between May and August 2022 with some eight loans worth Sh43.38 billion being signed between September and December the same year.
Five loans worth Sh64.8 billion were signed between January and April this year.
Out of the total amount, only three loans totalling Sh24.2 billion, primarily commercial loans, had been partially disbursed.
This indicated a disbursement rate of less than 11 per cent. The disbursed loans were primarily utilised for general budget support.
“Timely and full disbursement of loans is critical for capacity to repay loans (by generating financial or economic resources) and for enhancing project implementation to spur economic development,” the committee stated in the report.
The committee warned that due to the high number of undisbursed loans, there is an increased likelihood of the incurrence of commitment fees, among other charges.
“Notably, the repayment profile of the loans contracted during this period indicates that a substantial number of the loans will be due for repayment between three and 10 years,” the report states.
The committee stated that failure to disburse the loans on time implies that the intended project benefits may not be realised by the time the repayments begin.
The facilities were mainly bilateral and multilateral loans intended for infrastructure projects, the energy sector, the education sector and other projects with high impact.
“This will primarily affect financing for projects and/or initiatives designed to achieve social development objectives, support policy and institutional reforms of national and subnational governments,” the report reads.
