President William Ruto has already enacted a new law that will henceforth compel the government not to borrow more than half of the country’s Gross Domestic Product loans.
The country’s total public debt has already surpassed the Sh10 trillion ceiling approved by Parliament. This is according to documents tabled before Parliament by the National Treasury, which shows that the total public debt stock of the country was way off the ceiling set by MPs as required by law.
The documents tabled before the National Assembly’s Public Debt and Privatization Committee show that the debt stock has surpassed the Sh10 trillion ceiling by about Sh278 billion as of the close of June 2023.
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Treasury Cabinet Secretary Njuguna Ndung’u, in the documents, argues that overall, the new debt stock is currently comprised of Sh5.44 trillion in external debt, making up 52.9% of the total public debt, and Sh4.83 trillion in domestic debt, accounting for 47.1% of the total public debt.
Ndung’u, who appeared before the committee, was tasked by members to explain why the National Treasury had not communicated with the National Assembly regarding this breach, especially since Sh10 trillion had already been allocated for the fiscal year 2022/23.
In response, Ndung’u said that the exchange rate of the Kenyan shilling against the US dollar had significantly impacted this situation.
“For the current Financial Year, 2023/24, the National Treasury has outlined plans to raise a net amount of Sh718 billion,” Ndung’u said.
“This will be achieved through a combination of Sh131 billion in net external borrowing and Sh587 billion in net domestic borrowing,” he added.
Additionally, the CS informed the committee that a Eurobond, amounting to USD 2 billion, is due in June 2024.
This particular sum has already been included in the approved budget for the 2023/2024 fiscal year, and measures have been instituted to ensure the redemption of this amount.
“The National Treasury has engaged Joint Lead Managers (JLMs), including the Standard Bank and Citi Bank, to assist the Government. The settlement options include access to the International Capital Market and alternative financing from multilateral and bilateral sources, including bank syndications,” said Ndung’u.
The revelations by the CS come even as President William Ruto enacted a new law that will henceforth compel the government not to borrow more than half of the country’s Gross Domestic Product loans.
The debt-anchor Bill – an International Monetary Fund (IMF) backed legislation, is aimed at helping the country manage and regulate the ballooning public debt.
The new law now sets borrowing by the government at about 55% of the country’s GDP, away from the current numerical Sh10 trillion public debt ceiling.