The national debt of Kenya rose to $70.73 billion in June as inefficient parastatals cost taxpayers an additional $15.13 million in loan commitment fees.
The national debt is 52.1 percent and 47.9 percent, external and domestic respectively.
The ballooning debt has pushed the National Treasury into borrowing from the domestic market through treasury Bills and Bonds to pay off maturing foreign obligations in violation of the Public Finance Management (PFM) law, according to the Office of the Controller of Budget (OCOB).
The Controller of Budget Margaret Nyakang’o through a report presented to the Senate Standing Committee on Finance and Budget in August, said as best practice, the government should not borrow to repay loans as this contravenes Article 201 (c) and section 15(2)(c) of the PFM Act (2012).
These provisions of the PFM law state that ‘’over the medium term, the national government‘s borrowings shall be used only for the purpose of financing development expenditure and not for recurrent expenditure.
“National Treasury should therefore ensure all requests are in line with Article 201 (c) and section 15(2) (c) of the PFM Act (2012),” said Dr Nyakang’o.
According to the report Kenya borrowed $12.11 billion in 12 months bringing its total debt to $70.73 billion as at June 30 2021 while in the current financial year (2021/2022), the government expects to borrow $12.93 billion.
In July alone, the government has borrowed $622.47 million from the domestic market.
In June, the IMF revealed through its country report No 21/137 that Kenya is negotiating with rich countries with hopes of extending its debt repayment moratorium by another six months to generate more resources to finance its record $33.02 billion recovery budget for the 2021/2022 fiscal year.
More=theeastafrican=
Kenya’s national debt hits $70.7bn
