The National Treasury can now borrow up to a limit of Sh9 trillion after the Senate yesterday voted to raise the country's debt ceiling.
Kenya's borrowing limit is now no longer pegged to its Gross Domestic Product (GDP), after the senators voted to amend the Public Finance Management (National Debt) (Regulations), 2019 to place a numerical value to the debt ceiling.
At least 30 senators voted to raise the debt ceiling while seven voted against raising it, according to Senate Speaker Ken Lusaka.
The Government desperately needed the approval to prevent it from running out of funds during this financial year, and to help it retire expensive commercial debt while taking up cheaper loans from institutions like the World Bank.
With the public debt hitting Sh6.2 trillion, according to the latest figures by the Central Bank of Kenya (CBK), it means that each Kenyan now owes the lending countries and institutions Sh130,349.
The figure is likely to increase further by the end of this year as the Government projects to borrow Sh640 billion to plug the deficit that exists in this year’s Sh3.02 trillion budget read in June by suspended National Treasury Cabinet Secretary Henry Rotich.
The Treasury projects that total public debt will rise to Sh9 trillion by June 2024.
Prior to the voting, the Parliamentary Budget Office (PBO) had warned that increasing the debt ceiling to Sh9 trillion will drastically reduce allocations to counties.
Senators Mutula Kilonzo Jr (Makueni), Moses Wetangula (Bungoma), Aaron Cheruiyot (Kericho), Millicent Omanga and Victor Prengei both nominated, opposed the move to raise the debt ceiling.
Mr Wetangula said that under article three of the East African Community (EAC) protocol, the debt ceiling should not exceed 50 per cent of the GDP
“Voting against this regulation, is not going against the President, the State or the Treasury. We are saying as a responsible Parliament, we should first cap our debt ceiling at Sh7.5 trillion so that we can first see how that will serve us," Wetangula said.
"We have a ferocious and uncontrollable appetite for borrowing which is not good for us.”
Mr Kilonzo said the first amendments done in Parliament allowed Mr Rotich to move the debt from Sh1.2 trillion to Sh2.3trillion which has not turned out well.
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