The National Assembly has agreed to raise Kenya’s debt ceiling to Ksh 10 trillion from the current Ksh 9 trillion in what is aimed at giving the National Treasury allowance to borrow more.
The proposal by the National Treasury to push up the debt ceiling was, however, opposed by lawmakers allied to Deputy President William Ruto, who felt the changes only aggravate the country’s debt situation.
This came after the MPs, through a special Motion, amended the Public Finance Management (PFM) (National Government) Regulations of 2015, published as a legal notice number 89 of 2022.
Initially, National Treasury Cabinet Secretary Ukur Yatani had proposed to shift the debt ceiling to an anchor of 55 per cent of the Gross Domestic Product (GDP) in net present value terms.
However, lawmakers disagreed with the proposal, forcing the National Treasury to revert to the debt ceiling. It is a decision that will not go down well with the International Monetary Fund (IMF) which had pushed Kenya to go back to an anchor of debt-to-GDP, describing it as the international best practice.
“Pursuant to the provisions of the PFM Act, this House approves the PFM (National Government) Regulations of 2022, by providing the public debt shall not exceed ksh 10 trillion,” the adopted special motion read.
The next administration is expected to implement the Ksh 3.33 trillion budget for the financial year 2022-23, with the country expected to borrow close to Ksh 846 billion.
Estimates contained in the 2022 budget presentation shows the level of public debt is set to hit Ksh.8.6 trillion by the end of this month from Ksh.8.4 trillion at the end of March leaving a narrow window of just Ksh.400 billion to the previous Ksh.9 trillion.