MPs push for capping debt at Sh6tr
SEE ALSO :City Hall on the spot over title deeds“One problem is that currently; it is hard for most people to understand the level of debt. The purpose of the law is not to make things obscure but for ease of understanding and planning,” he said in Nairobi yesterday. Currently, the National Treasury is limited to borrowing less than 50 per cent of the economy or the gross domestic product (GDP) in net present value terms, which Treasury claims are still within limits. However, in absolute terms, debt to GDP is close to 60 per cent. This has not always been the case. In 2014, the State asked Parliament to increase the external borrowing ceiling by Sh1.3 trillion to Sh2.5 trillion and pushed up the total debt to Sh2.4 trillion. This was supposed to be done annually, but the new administration had other plans.
SEE ALSO :MP wants NIMMS company barred from KenyaQuick cash Legislation made under the Jubilee administration quietly took away Parliament’s direct control over the amount Treasury is allowed to borrow. Instead, it was given to the executive. Under the new Public Finance Management Act of 2015, the parliamentary oversight role was removed and Parliament was given a say over the budget while Treasury drove the financing agenda. Without a cap, the State quickly hit a milestone when it crossed the Sh3 trillion mark in 2015 and has been doing on average a trillion annually. In 2017, the Government crossed the Sh4 trillion mark. In June this year, it crossed the Sh5 trillion mark, even as Treasury outlined a Sh558.9 billion borrowing calendar in the current financial year.
SEE ALSO :MPs take new milk rules back to publicThe National Assembly has done little to control Treasury’s appetite for huge borrowing, approving expanded budget deficits and supplementary budgets without looking at reduced growth in revenues. Analysts say MPs have only been focusing on their perks, loans and mortgages while paying little attention to Treasury’s debt management strategy.
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