The government is trying to raise Kenya’s debt ceiling to 10 trillion shillings

NAIROBI, Kenya, May 31 – The National Treasury has proposed raising the debt ceiling to Sh10 trillion from the current Sh9 trillion to allow the government to borrow more to meet the Sh3.33 trillion budget for fiscal year 2022-23 finance.

In a Gazette note published on May 26, Treasury CS Ukur Yattani called on Members of Parliament (MP) to amend the Public Finance Management (National Government) Regulations 2015 to raise the limit.

“Regulation 26 of the Public Finance Management (National Government) Regulations 2015, is amended to Sub-regulation 1 by deleting paragraph (c) and replacing it with: In accordance with the provision of Section 50(2) of the Act, the public debt may 10 trillion Ksh,” the statement said in part.

The current regulation was issued three years ago and can only take into account the 2022/23 budget and medium-term planning.

First, the National Treasury invited the public to provide their comments on the Public Finance Management (Amendment) Regulations of 2022, which aim, among other things, to remove the Sh9 trillion debt ceiling.

As part of the changes, the CS Yatani-led ministry wanted to return to a debt ceiling calculated by the country’s gross domestic product, setting the government debt ceiling at 55 percent of GDP.

Under the original proposal, the National Treasury had proposed expressing the debt limit in absolute terms rather than as a percentage of GDP, arguing that this was “consistent with the Constitution in terms of openness, accountability and clear financial reporting”.

“The debt ceiling allows Kenya to continue accessing concessional funding from multilateral and bilateral agencies to fund development programs for inclusive economic growth and development,” she had argued.

By June 2021, Parliament’s Budget Office had indicated that Kenya’s debt as a percentage of GDP was 68, a figure higher than the proposed figure of 55 percent.

From December 2021, Kenya’s stock of public and state-guaranteed debt was Ksh8.02 trillion (US$70.97 billion).

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