The Parliamentary Budget Committee has turned down the government’s plan to raise the debt ceiling to Sh12 trillion.
This is after the government sought to increase the debt ceiling from Sh9 trillion to meet its financial obligations.
However, the National Assembly’s Budget and Appropriations Committee chaired by Kieni Member of Parliament Kanini Kega argues that the request by the National Treasury to be allowed to cover a deficit of Sh846 billion in the 2022/23 financial year through borrowing is not acceptable.
The committee in its review of the Budget Policy Statement 2022 proposed that the 2022-23 funding deficit be reduced to Sh400 billion from the Sh846 billion.
It is forecast that by the end of June 2022 the stock of public debt would hit Sh8.6 trillion.
“The committee is concerned that the BPS had proposed Sh846 billion as the overall deficit which if approved has the potential to breach the approved debt ceiling of Sh9 trillion,” the Kega-led team said in a report tabled in Parliament.
Treasury Cabinet Secretary Ukur Yatani on February 3 wrote to Parliament informing of the Treasury’s intention to amend the Public Finance Management (PFM) Act, 2015 to set the debt cap at the said percentages.
“The National Treasury is committed to presenting the proposed amendments to Parliament for approval as soon as public consultations are finalised,” the CS said in the letter to Assembly Clerk Michael Sialai.
The request was made in the Budget Policy Statement presented in the House in December 2021, and was then forwarded to the committee for examination before being formally tabled for debate by MPs.
“The committee is concerned that the BPS had proposed an overall deficit of 846 billion which, if approved, has a potential to breach the approved debt ceiling of 9 trillion shillings,” the committee said in its report.
As projected by the stakeholders, the stock of debt will amount to Sh8.6 trillion by the end of June 2022.
This means the only amount the government can borrow in the next financial year without an amendment of the ceiling will be Sh400 billion.
As of September 2021, the Central Bank of Kenya’s (CBK) weekly bulletin indicated that the country’s total debt stood at Sh7.99 trillion.
Public and publicly guaranteed external debt stands at Sh4.1 trillion while domestic debt at Sh3.9 trillion.
Commercial loans account for about 30 per cent of external loans while bilateral debts take up 30 per cent as well.
In 2019, MPs approved a notice by the Treasury to increase the cap for State borrowing in nominal terms to Sh9 trillion, a move which provided the exchequer room to borrow Sh3 trillion.
