Treasury Cabinet Secretary Njuguna Ndung'u, on Friday, April 28, struggled to convince members of parliament to alter the debt ceiling and replace the numerical valuation with the Gross Domestic Product.
While appearing before the Committees on Budget and Appropriations, Public Debt and Privatization, and the Departmental Committee on Finance and National Planning, the CS proposed the amendment of the Public Finance Management (PFM) Act 2012.
The CS sought to remove the current numerical debt ceiling of Ksh 10 trillion and replace it with a debt ratio of 55 per cent present value of the Gross Domestic Product (GDP).
However, the MPs tasked the CS to explore the calculation of the debt ceiling based on the revenue collected.
"We cannot allow you to continue to pile more debt in a situation where you can not pay salaries in time. You are being unfair," Samuel Atandi (Alego Usonga) stated.
Some questioned why the CS sought to make the adjustment arguing that the country was already in excess debt.
"I do not understand why you are recommending a 55 per cent ceiling yet you have indicated we are at 62.1 per cent," Danson Mwashako (Wundayi) posed.
In his defence, the CS noted that the borrowing headroom of Ksh610 billion was against a projected fiscal deficit of Ksh720 billion for the financial year 2023/24.
"The country has to adopt a practical debt management policy," the CS added.
Furthermore, Njuguna explained that the proposed debt anchor framework conforms with the international best practices for settling debt limits and provides debt sustainability.
Additionally, he argued that it would enhance transparency and accountability in the management of public finance in line with the Constitution.
The CS vowed to engage the lawmakers to help them understand the new framework so that they may approve it once it is tabled in Parliament for consideration.
