Nairobi — Kenya’s Treasury Cabinet Secretary Ukur Yatani has assured that the country’s debt is sustainable, following concerns of massive borrowing.
Yatani who spoke Thursday when he presented the 2021/22 financial budget in Parliament said he however, favours the proposal by the Budget Committee to set a debt ceiling to guide borrowing.
He told parliamentarians that he will soon be seeking their permission to raise the country’s debt ceiling from Sh9 trillion to a higher figure, adding that raising the ceiling would allow the country to manage its debt operations and finance a Sh930 billion deficit in the new budget.
Despite its sustainability, Yatani however admitted that the economy’s debt carrying capacity had declined.
“Financing of the fiscal deficit will continue to be strictly guided by the Debt and Borrowing Policy and the annual Medium-Term Debt Strategy,” he said.
In defense of the government’s borrowing appetite, Yatani said they are implementing reforms to strengthen the institutional arrangement of public debt management by aligning the operations of the Public Debt Management Office to the PFM Act.
In this respect, Yatani said decisions on the day-to-day management and operations of public debt management shall be undertaken by the Public Debt Management Office to enhance efficiency, strengthen accountability and transparency.
He also revealed that the government had scheduled a set of debt management operations to lower cost and risk in our public debt portfolio to improve on the country’s debt sustainability indicators and sovereign credit rating.
“I look forward for support of the august House for the amendment of public debt ceiling set in the Public Finance Management Act to enable implementation of debt management operations including financing of the fiscal deficit,” Yatani said.
The CS’s affirmation come days after a report by Controller of Budget Margaret Nyakang’o said the country’s total debt stood at Sh7.34 trillion as of March 31, 2021, representing 16.7 percent growth from Sh6.28 trillion as of March 31, 2020.
The Kenyatta-led administration for instance borrowed Sh1.06 trillion during the coronavirus pandemic period to push the country’s public debt to Sh7.34 trillion.
Kenya’s added expenditure has been ballooning fueled by President Uhuru Kenyatta’s need to continue investing in expressways, ports and railways as he nears the end of his second term in office next year.