The National Treasury on May 20 relinquished the public debt and borrowing mandate to the Public Debt Management Office. The Public Debt Management Office is now operational as an independent office following de-linking from the treasury.
CBK data shows that public debt rose to KSh6.2 trillion as of March 22, 2020. The Parliamentary Budget Office (PBO) says in FY2020/21 that fiscal Deficit is projected to reach 7.3% of GDP, indicating a widening scenario compared to the previous projection of 4.9% of GDP.
Looking deeper into PBO’s data reveals declining revenue implying that Kenya must be able to plan for external and domestic borrowing for budgetary support. PBO says that the projected fiscal deficit for FY20/21 will be financed by net external financing of KSh349.7 billion and net domestic borrowing of KSh486.2 billion.
Public Debt 2010-2020
In a decade, Kenya’s public debt has skyrocketed from a paltry Ksh1.229 trillion equivalent to 39% of GDP as at the end of June 2010 to Ksh6.3 trillion as at end-March, 2020. The stock is made up of;
- Foreign currency Debt: KSh3.2 trillion debt as at end-March, 2020
- Domestic currency Debt: KSh3.1 trillion as at end-March, 2020
Budget Deficit for Fiscal Year 2019/2020 is KShs 657.4 billion while Budget Deficit for Fiscal Year 2009/2010 was KShs 163.0 billion.
Establishment of PDMO
The growth in complexity of public debt necessitated the drafting of the Public Debt and Borrowing Policy. The policy mandates PDMO to manage public debt where it will;
- Borrow from domestic and external sources;
- Issue guarantees with approval from Parliament
- Report to Parliament and to the public on public debt.
- Make operational decisions on debt management and the day-to-day management of the Office
The enactment and approval of the Public Debt and Borrowing Policy allowed Treasury to formally delegate mandate for managing public debt to the Public Debt Management Office. Parliament will approve PDMO’s Director-General rather than being an appointee of the CS National Treasury.
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