Controller of Budget Margaret Nyakang'o Raises Alarm on Debt Amid Ruto's Loans

 Controller of Budget Margaret Nyakang'o at her office on November 10, 2023 (left) and President William Ruto addressing a forum at the AU headquarters in Ethiopia on February 16, 2024.
Controller of Budget Margaret Nyakang'o at her office on November 10, 2023 (left) and President William Ruto addressing a forum at the AU headquarters in Ethiopia on February 16, 2024.
PCS
CoB

The Controller of Budget Margaret Nyakang'o has raised concerns about Kenya's debt portfolio revealing that it exceeds the required limit.

In her National Government Budget Implementation Review Report covering the first six months of the current financial year, the CoB noted that the debt surpassed the set limit of 55 per cent of the GDP as prescribed in the Public Finance Management Act.

According to the report, Kenya's outstanding debt stood at Ksh11.14 trillion as of December 31, 2023.

The Ksh11.14 trillion comprised Ksh6.09 trillion, which is owed to external lenders and Ksh5.5 trillion for the domestic debt portfolio.

Ruto
President William Ruto speaking during a joint National Executive Retreat and Parliamentary Group consultative meeting in Naivasha, Nakuru County on February 19, 2023.
PCS

Consequently, she advised the Executive to undertake various fiscal measures to ensure the debt portfolio is reduced amidst the fluctuating exchange rate which has contributed to the increase in Kenya's debt.

Most of the loans are taken in dollars, so the debt portfolio rises whenever the Shilling weakens against the Dollar.

"Section 50(2) of the PFMA 2012 states that the national government may borrow money under this Act or any other legislation and shall not exceed the limit set by Parliament. The public debt ceiling was set at 55 per cent of the Gross Domestic Debt by Parliament (Ksh10 trillion as of the end of December 2023).

"Notably, the public debt stock surpassed the parliamentary limits. The Controller of Budget recommends that there is a need to reduce deficit budget financing through fiscal consolidation to curb further growth of public debt. Further growth in public debt strains revenue since public debt is a first charge to the Consolidated Fund," read the report in part.

Meanwhile, President William Ruto has secured loans from multilateral institutions such as the World Bank and the International Monetary Fund (IMF) in recent months.

For instance, in January, IMF approved a Ksh99.9 billion (USD684.7 million) credit facility for Kenya. At the time, it was indicated that the money would be beneficial owing the USD2 Billion Eurobond that was due in June.

The maturing Eurobond was settled early in the week following successful pricing done by the government in the Eurobond market during the month.

"Yesterday marked a significant financial milestone for Kenya as we successfully settled the buyback of a substantial part of the USD 2 billion 2014 Eurobonds that were scheduled to mature on June 24, 2024, by paying USD1.5 billion raised on February 12 2024.

"The successful execution of both the buyback and the new bond issue demonstrates strong investor confidence in Kenya through the international capital markets, and a vote of confidence in the government's overall economic management, particularly our public debt management strategy," Ruto stated during the government retreat on February 21.

President William Ruto meeting with representatives of IMF at State House on November 13, 2023.
President William Ruto meeting with representatives of IMF at State House on November 13, 2023.
PCS