The National Treasury and Planning has finalized preparing the Public Finance Management (Amendment) Bill, 2022, the Public Finance Management (National Government) (Amendment)Regulations, 2022 and the Public Finance Management (County Government) (Amendment) Regulations, 2022 and the same have been posted to the National Treasury website www.treasury.go.ke.
Pursuant to Sections 4 (a) and 5 (3) (a) and (b) of the Statutory Instruments Act, 2013, the National Treasury invites interested members of the general public to submit
written comments and or inputs/memoranda on the Public Finance Management (Amendment) Bill, 2022, the Public Finance Management (National Government) (Amendment) Regulations, 2022 and the Public Finance Management (County Government) (Amendment) Regulations, 2022.
The main purpose of these Amendments is to give effect to Article 214(2) of the
Constitution of Kenya 2010 and Section 50(2) of the PFMA that provides that “the
national government may borrow in accordance with this Act or any other
legislation and shall not exceed a limit set by Parliament”.
Further to define what falls within the financial obligations as per the provisions of the ConstitutionArticle 214(2)
National Treasury in a statement said review the relevant provisions of the Public Finance Management (PFM) Act will ensure the terms used in the Act are consistent with the definition of “Public debt” in Article 214(2) of the Constitution.
The proposed amendments to the PFM Act 2012 are meant to address the definitional disparity of what constitutes public debt as defined in Article 214 (2) of the Constitution whereas the PFM Act uses the word national public debt.
The Bills also seek to define financial obligations as referred to in Article 214 (2) of the
Constitution to guide the operationalization of the debt limit; provide for the circumstances under which the debt limit may be exceeded such as depreciation of the shilling, significant balance of payment imbalances or abrupt fiscal disruptions and therefore there is need to address such eventualities in law and the requisite redress; provide for clarity on fiscal disruptions “(2A) For the purposes of sub section (2) above fiscal disruptions include; war, health pandemic and natural disasters’’- circumstances under which debt limit may be exceeded.
Counties do not deal with “public debt” rather with their own debts which form part of the public debt.
Currently the debt limit approved by Parliament is not anchored on sustainability. There is therefore need for Parliament to be advised on the sustainable debt levels as they set the public debt limit.
The Constitution defines public debt and not national debt
The legal reforms also seeks to provide for debt related expenditures that could be charged to the CFS as public debts could have other financial obligations including fees, commissions, charges and other expenses such as insurance, legal etc. which are not explicitly provided for in the current provisions
The amendments also seeks to provide for additional roles to the PDMO to ensure that the debt limit approved by Parliament is anchored on sustainability as advised by a competent authority , which here will be the Public Debt Management Office(PDMO).
In a legal notice, the CS National Treasury and Planning Ukur Yatani said the regulations new regulations will ensure county government’s financing needs and payment obligations are met at the lowest possible cost over the medium to long term, with a prudent degree
of risk.
The Attorney General upon publishing these Amendments and in the course of
preparation of the amendments will submit to the National Assembly for further
guidance including public consultations.The Public Finance Management (Amendment) Bill, 2022
The principal object of the Public Finance Management (Amendment) Bill, 2022 Bill is to amend the Public Finance Management Act No. 18 of 2012 to operationalize the Public Debt and Borrowing with regard to framework for monitoring the level of public debt to align it with the provisions of Article 214(2) of the Constitution which defines “public debt” to
mean all financial obligations attendant to loans raised or guaranteed and
securities issued or guaranteed by the national government.
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