The Senate committee has approved the amendment to the Public Finance Management Act, 2012. The act seeks to raise Treasury’s debt limit to an absolute KShs9 trillion.
The National Assembly already seconded the bill.
In its report, the Senate Committee on Delegated Legislation and Finance argues that a crisis would if they rejected the act. This would, therefore, force the National Treasury to cancel all projects. It would also have to do a drastic cutback of the budget that has already been allocated to the Judiciary, National Assembly, Executive and the Counties.
Thus, the proposed amendments now lie in the hands of senators. Should they approve of the proposal, Kenya’s borrowing ceiling will shift from the current net present value of 50% of Gross Domestic Product to an absolute value of Kshs 9 trillion.
According to the National Treasury, plans are underway to create room for more borrowing. This is as a means to enable the restructuring of Kenya’s current debt profile. It will be made possible by pushing government lending away from the domestic market. Substituting expensive debt for cheaper options will also be a plan.
Kenya’s public debt at the end of June 2019 stood at KShs5.89 trillion. However, it has since moved past the Ksh.6 trillion mark as at the end of September.
The National Treasury derives its mandate from the Constitution 2010, the Public Management Act 2012 and the Executive order No. 2/2013. The National Treasury executes its mandate in line with any other legislation as may be developed or reviewed by Parliament from time to time.
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