Senate in fresh bid to cut State’s expanding borrowing appetite

The National Treasury building, Nairobi. [Elvis Ogina, Standard]

Members of Parliament want the National Treasury barred from borrowing from the Kenyan market in a renewed push to reduce the stock of public debt.

During a special sitting to debate the Budget Policy Statement (BPS) for the 2022-23 financial year, senators took the National Treasury to task over the government’s growing fiscal deficit.

“The government should be restrained from borrowing from the domestic market because this is denying the private sector and small and medium enterprises (SMEs) credit that they need to survive the tough business environment,” said Narok Senator Ledama Ole Kina.

“This Budget Policy Statement is utopian and completely unattainable,” he said. “We are not going to stop you from borrowing because we have no control over what you are do, but because Parliament nowadays is a conveyor belt, we want to ensure where we can stop you from doing it, we tell you not to borrow from the domestic market.”

Last month, Auditor General Nancy Gathugu told the Senate Committee on Finance and Budget that Kenya’s public debt is progressively increasing and set to cross the approved Sh9 trillion ceiling in a few months.

“The outstanding public debt stands at Sh7.6 trillion as at June 30, 2021, which represents 84 per cent of the maximum ceiling of Sh9 trillion approved by parliament,” she said.

According to the Auditor General, Kenya’s expense on public debt has more than doubled from Sh421 billion in 2015 to Sh867 billion in the last financial year.

In the current financial year, the country’s fiscal deficit is set to hit Sh1,029 trillion, which will force the government to head to the debt markets to fund its operations and projects.   

According to the BPS, fiscal operations of the government by end of October 2021 resulted in an overall deficit including grants of Sh193.7 billion against a projected deficit of Sh253.7 billion.

“This deficit was financed through net domestic borrowing of Sh214.9 billion and net foreign repayment of Sh33.5 billion,” said Treasury Cabinet Secretary Ukur Yatani.

Total expenditure and net lending for the period ending October 2021 stood at Sh854 billion, including Sh612 in recurrent expenditure and Sh148.9 billion in development expenditure.

“We’ve had continued struggles with the National Treasury just to obtain the debt register,” said Kericho Senator Arron Cheruiyot.

“On more than 10 different occasions, the Senate has asked for the country’s debt register, but the best we’ve received is an Excel sheet shared in one of the sessions we had with Treasury.”

Senators also asked the government to increase the equitable share that goes to county governments in line with the latest national audited accounts as per the law.

“Why are we still talking of 2017-18 audited accounts and can’t speak of 2019 or 2020 audited accounts?” Posed senator Cheruiyot.

“Sh370 billion is not enough and we have put a proposal that counties receive Sh500 billion in equitable share, and we hope it is supported if the government is serious about strengthening devolution.”

During the special sitting, the Senators also approved the Proceeds of Crime and Anti-Money Laundering (Amendment) Bill, 2021 for a second reading against objections raised by some MPs over contentious clauses in the proposed law. 

Tharaka MP George Murugara had last week raised a question on the constitutionality of Clauses 2 and 9 of the Bill that seek to include advocates, notaries and other independent legal practitioners as reporting institutions.

He said the amendment infringes on client-advocate confidentiality, the right to privacy and right to access to information.

MPs, however, shot down the objections, stating that the constitution provides for limitations to rights and freedoms in certain cases and the new law will not infringe on client-attorney privilege.

The Proceeds of Crime and Anti-Money Laundering (Amendment) Bill, 2021 proposes suspending the right to privacy under Article 31 of the Constitution for individuals suspected of violating the law.

“Where a person is suspected or accused of an offence under this Act, the person’s home or property may be searched, possessions seized, information relating to that person’s financial, family or private affairs may be revealed or the privacy of a person’s communications may be investigated or otherwise interfered with,” states the Bill.

“A limitation of a right under subsection (1) shall apply only for the purpose of the prevention, detection, investigation and prosecution of proceeds of crime, money laundering and financing terrorism.”

The Bill also expands reporting obligations to advocates, notaries and other independent legal sole practitioners.

If approved, lawyers will have to report to the Financial Reporting Centre on cases where their clients are suspected of engaging in money laundering. 

By Kamau Muthoni 42 minutes ago
Business
Premium You can now sue Kenya Power if it disconnects your supply, court rules
By Steve Mkawale 9 hours ago
Business
Blow to Finlays as UK court rules in compensation suit
By AP 22 hours ago
Business
Inflation hits record 10 in 19 EU countries using euro
Business
Premium Consumers face more pain as KRA inflation tax sets in today