Kenya Kwanza Alliance leaders have warned the government not to take on any further loans.
Led by Amani National Congress (ANC) leader Musalia Mudavadi, the alliance said that the public debt had grown six-fold since 2013, to Sh11.7 trillion (8.2 trillion in direct public debt and 3.5 trillion in guaranteed commitments) as of February 2022.
“The National Assembly and the Senate must avoid any further strangulation of Kenyans with additional debt, by refusing any request for approval of any new debt ceiling. We are aware that the National Treasury CS has prepared for submission to Parliament a new debt ceiling of approximately Sh12 trillion,” said Mudavadi during a press conference on today.
He further urged MPs to reject calls by Cabinet Secretary Ukur Yattani to raise the debt ceiling from the current Sh3 trillion to 55 per cent of the country’s GDP during a press conference on Budget Proposals in Meru.
According to Mudavadi, loan commitments have exceeded the set debt ceiling of Sh9 trillion approved by parliament, further crippling the country’s budgetary situation.
“The CS for the National Treasury should not sign any new loans including floating sovereign bonds during this transition. The National Assembly and the Senate should reduce the budget ceiling to ensure a fiscal deficit that does not exceed Sh400 billion and check on the growing public debt,” he stated.
Yattani in December last year told the International Monetary Fund (IMF) that Kenya aims to replace a nominal public debt ceiling with a debt anchor as a percentage of Gross Domestic Product (GDP) by the end of June 2022.
The debt ceiling is set at Sh9 trillion at present.
“The new framework would be centred on… a medium-term debt anchor set at 55 percent of GDP with debt measured in present value terms,” Yattani said in a December 2 letter to the International Monetary Fund.
At the same time, Kenya Kwanza addressed the equitable share of Sh495 billion to counties, rallying behind allied MPs’ proposal to increase the equitable share to counties to Sh495 billion in the financial year 2022/2023 under Section 25 (7) of the PFM Act, 2012.
According to Kenya Kwanza, the country does not require a constitutional amendment to give more money to counties.
“The law allows Parliament to pass a resolution to adopt the BPS with or without amendments. This amendment deserves the goodwill and unwavering support of all Members of the National Assembly,” the alliance said.
MPs from the alliance and its allies have recommended amending the budget to include an additional Sh2 billion for the devastating consequences of the epidemic, the deteriorating food security situation, and drought mitigation, including a livestock-off program.