KenGen, Kenya Airways up State-guaranteed debt by over Sh20 billion
SEE ALSO :Kenya imports more power despite rainsThe firms that increased their debts by huge margins include KenGen, whose stock of debt guaranteed by the government increased by Sh18 billion to Sh43 billion by end of June 2019, up from Sh25.78 billion in 2018. The Kenya Ports Authority increased the amount of debt guaranteed by the government by Sh4 billion to Sh34 billion from Sh30.1 billion. Kenya Airways, which has the largest stock of State-guaranteed debt, increased this to Sh76.7 billion last year, from Sh75.7 billion in 2018. Financial distress “As at June 30, 2019, total outstanding government guaranteed debt was Sh159.4 billion from Sh138.8 billion as at June 30, 2018. It is to be noted that even though the government did not issue new guarantees during the 2018-2019 financial year, the total stock of guarantees increased,” said Treasury in the draft Budget Policy Statement for the 2020-2021 financial year. “The increase to the tune of Sh20.6 billion was attributed to the drawdown of the already guaranteed debt.”
SEE ALSO :KenGen profit nearly doubles to Sh8.2bIn a December 20, 2019 circular, Treasury told parastatals that it would not guarantee those that have not been servicing their debt obligations while directing them to cancel any new projects to enable them to finance “All-State Corporations must prioritise debt service and payment of statutory obligations as a first charge on revenues. Treasury will not give concurrence for borrowings or grant guarantees for State Corporation which are in default of loan repayments and other statutory obligations,” said the circular to all State entities. “State corporations with loan arrears should provide clear proposals on how they intend to clear them… (those) in default of debt servicing and payment of statutory obligations must reduce expenditures in other areas and go slow on implementation of new projects.” Treasury observed that it would undertake to identify State firms in financial distress and make recommendations on such measures as restructuring, merging or winding them up to reduce the financial burden to the Government.
Do not miss out on the latest news. Join the Standard Digital Telegram channel HERE.