Members of Parliament have launched an inquiry into the circumstances under which the National Treasury paid Ksh1.358 billion to lenders who are yet to disburse loans to the government.
The Public Debt and Privatisation Committee led by Balambala MP Abdi Shurie on Monday, August 7, grilled the Controller of Budget Dr Margaret Nyakang’o in an attempt to unravel the unusual payment to banking institutions.
In her comprehensive report reviewing the disbursement of foreign loans over the past five financial years, Nyakang'o revealed that the Treasury paid the money as a commitment fees.
"In the Financial Year 2022/23, the National Treasury paid a commitment fee totaling Ksh1.358 billion, relating to undisbursed loans amounting to Ksh1.195 trillion," Dr Nyakang’o revealed.
A commitment fee is an amount a lender charges to keep a specific loan amount available to a borrower, and this fee may also be charged for the unused portion of a line of credit.
In response to her revelations, the Public Debt and Privatisation Committee demanded to know whether there are some loans that have been disbursed including the respective amounts.
The MPs also wanted to know the implementing agencies and the exact amount that was borrowed, and how the National Treasury can effectively use the Public-Private Partnership (PPP) model to fund projects.
“We are currently preparing another report in relation to the just ended Financial Year, where we are analyzing the loans and shall be presenting that to the committee once ready.
"The report will capture the total loans signed for and how much per loan, so that we are able to understand why we are paying the commitment fees as at that particular time," Nyakang’o explained.
According to Nyakang’o, Kenya's debt situation is a cause for concern. The country's total debt stock reached Ksh9634.85 (US$91.0 billion) in April 2023, which is equivalent to 71.0 per cent of the country's Gross Domestic Product (GDP).
"There are loans where we are paying because we have not disbursed anything, but there is somewhere we have disbursed a portion and some of it is still outstanding," Nyakang’o explained.
The previous regime borrowed trillions to fund an ambitious infrastructural development including the SGR.
