Michael Kahiti, the chairperson of the National Taskforce of the Public Finance Management Act (PFM) 2012 amendments and head of the Resource Mobilisation Department at the National Treasury, detailed changes in borrowing money on Saturday, April 22.
Kahiti, who spoke in Machakos, noted that there was a move to push for the government to only borrow depending on its capacity to pay the debt.
He argued that the debt ceiling does not reflect the country's repayment ability.
“The limit is Ksh10 trillion but the ceiling may not say much because it’s not anchored on the country’s ability to pay, the changes propose a rate of debt that the economy can sustain,” he stated.
The chairperson explained that some of the finance law changes will reduce the debt burden on Kenyans.
“We are currently reeling from the effects of drought but under the new proposals the country will slow on borrowing during such situations and the national treasury will be required by the law to explain to the public the debt-carrying capital of the country,” he disclosed.
Furthermore, he noted that the Treasury Cabinet Secretary Njuguna Ndung'u will be required to appear before the parliament if the borrowing threshold exceeds.
The CS will also need to report the causes of the borrowing exceeding the limit and measures to solve the situation and the timelines.
According to Kahiti, the new changes will emphasise transparency and accountability in public finance management.
Meanwhile, on Monday, April 17, the government announced returning to the international market to raise money during the tough economic times.
In a statement from the National Treasury, the government announced that it would seek to raise money by issuing international sovereign bonds.
A sovereign bond is a debt security issued by a government to raise money to fund state programs, pay down old debt, pay interest on current debt, and any public expenditure needs.
By March 2023, the Kenya Kwanza administration had signed up for eight new loans worth Ksh43.4 billion in the four months between September and December 2022.
According to the Treasury, commercial bilateral and multilateral loans will be repaid between 2030 to 2047.
“The total value of the eight loans signed is equivalent to Ksh43,381, 450,293. Two of the loans had been disbursed by the time of submitting this report,” Njuguna Ndungu, the Treasury Cabinet Secretary, told MPs in Parliament.
