NAIROBI, Kenya, May 31 – The National Treasury has proposed an increase in debt ceiling from the current Sh9 trillion to Sh10 trillion in order to enable the Government to borrow more to finance the Sh3.33 trillion budget for the 2022/23 financial year.
In a Gazette notice issued on May 26, Treasury CS Ukur Yattani has urged the Members of Parliament (MP) to amend the Public Finance Management(national government) Regulations, 2015, to increase the limit.
“Regulation 26 of the Public Finance Management (National Government) Regulations 2015, is amended in sub-regulation 1 by deleting paragraph (c) and substituting therefore with: pursuant to the provision of section 50(2) of the Act, the public debt shall not exceed Ksh10 trillion,” the notice read in part.
The current regulations were enacted three years ago and it can only cater to the 2022/23 budget and the medium term plan.
Initially, the National Treasury invited members of the public to share their comments on the Public Finance Management (Amendment) Regulations, 2022 which seeks among others, to remove the Sh9 trillion debt ceiling.
As part of the amendments, the CS Yatani-led ministry sought to revert to a debt ceiling that is calculated according to the Gross Domestic Product of the country, the cap on public debt was set at 55 percent of the GDP.
According to the initial proposal, the National Treasury had proposed that the debt limit be expressed in absolute figures rather than a percentage of GDP arguing that its ‘consistent with the constitution on openness, accountability, and clear fiscal reporting.’
“The debt limit allows Kenya to continue accessing concessional funding from multi-lateral and bi-lateral agencies to finance development programs for inclusive economic growth and development,” it had argued.
As of June 2021, the Parliamentary Budget Office had indicated that Kenya’s debt as a percentage of GDP was 68, a figure which is higher than the proposed 55 percent figure.
As of December 2021, Kenya’s stock of public and publicly guaranteed debt stood at as at Ksh8.02 trillion($70.97 billion).