Senators on Wednesday voted to raise the country’s public debt ceiling to Ksh9 trillion as recommended by Treasury Cabinet Secretary Ukur Yattani who maintains that the ceiling had to be raised for the government to meet its financial obligations this year.
On Wednesday afternoon, 30 out of 47 senators rubberstamped the National Assembly’s revision of the public debt to Ksh9 trillion.
By doing so, the legislators trashed the Public Finance Management Act that caps public debt at no more than 50% of the country’s Gross Domestic Product (GDP).
As at the end of June, the country’s stock of debt stood at Ksh5.8 trillion which global financial institutions including the World Bank and the International Monetary Fund (IMF) have said is not sustainable.
In it’s latest economic update, the World Bank faulted the Treasury’s budget estimates terming them unrealistic
“Fiscal consolidation should be an outcome of a realistic revenue projection and a well-anchored expenditure position to ensure our debt remains sustainable,” World Bank Chief Economist Peter Chacha said during the release of the update last week.
The Kenya Revenue Authority (KRA) has been under alot of pressure to raise more revenue to service the government’s insatiable spending appetite.
CS Yattani who took over a distressed economy from his predecessor Henry Rotich is already feeling the heat of salvaging an economy saddled with debt.
“If we are not guaranteed this amendment, there will be a crisis in the country because we will not be able to implement this year’s budget,” CS Yattani told Senators two weeks ago.
CS Yattani says that the government, after criticism from virtually all stakeholders is ready to begin the process of restructuring the government’s debt portfolio.
Step one is abandoning the expensive commercial loans for the more affordable and long term concessional loans.
“We want to retire some of the old and expensive commercial loans with interest rates of up to 9.5 percent that are choking our economy,” CS Yattani told the Senators.
President Kenyatta has in the past six years been at pains to justify how the debt benefits the country. His position has been that the money has been injected into development projects that will grow the country’s economy.
Economists have however differed with the president saying that most of the borrowed money has been misappropriated and the balance invested into projects that do not provide value for money.
On Tuesday, Gatundu South MP Moses Kuria, a former President Kenyatta loyalist accused Treasury of cooking books to cover up its long list of poor economic decisions.
“As Parliament, we have failed Kenyans because we have sold them the romantic story that all is well. We have failed in our oversight because we could have said no but we said yes, selling lies that all is well. We are doing badly as an economy,”
“I ask the executive to apologize to Kenyans for their role in sinking the economy. For 7 years we have cheated this country even about our deficit, we have cooked books,” said the legislator during a breakfast show on Citizen TV.