The plans to give the National Treasury powers to increase public debt before parliamentary approval and later seek the same has been opposed by different stakeholders who note that this could plunge the country into deeper woes.
An amendment Bill to the Public Finance Management Act (2012) has proposed to give Treasury powers to breach the set debt levels but also requires the Ministry to give Parliament an explanation in writing whenever public debt exceeds the threshold set in law and offer a remedial plan.
Different industry players on Monday told National Assembly's Committee on Debt and Privatisation that the Treasury Cabinet Secretary could set the country on a slippery slope with the likely outcome being the country ending up with unsustainable debt.
"Exceeding the public debt threshold is a violation of the Constitution and the PFM Act. Therefore, the CS should not be given discretionary powers to advise on any excesses approved by the national and county assemblies," the Institute of Certified Public Accountants of Kenya (ICPAK) told the committee yesterday at a public participation forum on the amendment bill.
"As a country, we should at all levels not exceed the set debt sustainability levels."
The Institute of Economic Affairs (IEA) said Treasury should offer an explanation to Parliament before it breaches the limits that have been set in law.
IEA proposed that instead of sweeping powers, the amendment Bill should instead require that the CS provides "an annual report on the possibility of the breach within 30 days of the assessment showing that a risk of a breach is imminent. That report must contain the reasons and decompose the debt risk by domestic and foreign components".
It also added that the CS's discretion for reporting to Parliament on the possibility of breach of a limit set in law should be limited.
ICPAK further rooted for making the Public Debt Management Office an independent entity that can play an advisory role to both Parliament and Treasury.
PDMO is currently domiciled at Treasury but there have been efforts in the past to make it an independent authority. ICPAK noted that an independent debt office should be "devoid of control and interference by the executive."
