Kenyans are now expected to bear the burden of more National debt after the National Assembly raised the debt ceiling from the current Sh9trillion to Sh10trillion amid the high cost of living and increase in poverty.
The legislators approved the national treasury proposal allowing the government to borrow Sh846 billion to plugin budget deficit despite strong opposition from Members of Parliament affiliated to the United Democratic Alliance(UDA).
Ukur Yatani, the Treasury Cabinet Secretary, released a gazette notice to amend Section 26 of the Public Finance Management Act, 2015 to raise the debt ceiling, even as he pushes a separate Bill to change the debt cap from the present hard maximum to a percentage of GDP.
In October 2019, parliament increased the debt cap from Sh6 trillion to Sh9 trillion.
“Pursuant to the provisions of Section 50(2) of the Act, the public debt shall not exceed ten trillion shillings,” Yatani said in a May 26 legal notice.
The debt ceiling increase comes just months after Majority Leader Amos Kimunya tried to push through an amendment to the 2022/23 Budget Policy Statement (PBS) that directs the Treasury to alter the law to accommodate the larger budget deficit.
In February, the House reversed a recommendation by the Budget and Appropriations Committee (BAC) to cap borrowing for the coming fiscal year at Sh400 billion, in order to avoid exceeding the legal limit because the debt was expected to exceed Sh8.6 trillion this month.
Instead, the House voted to keep the Sh846 billion suggested by the Treasury in the BPS for 2022/23, with the caveat that the Treasury must submit amendments suggesting a higher ceiling by June for approval.
The State-backed Public Finance Management (Amendment) Bill 2022, which will cap public debt at 55 percent of GDP, will also be debated in Parliament.
Now that the law has been passed Treasury will have free reign to exceed the new debt ceilings as long as it can explain to Parliament why excessive borrowing occurred.