EACC to probe country's Sh11 trillion debt

EACC Chairman David Oginde speaks to the media after meeting Kisumu governor Peter Anyang Nyong'o at his office. [Michael Mute, Standard]

The Ethics and Anti-Corruption Commission (EACC) has promised to investigate how the country’s debt rose to Sh11.1 trillion.

With the current government incurring a debt of over Sh2.4 trillion since coming into power, the commission said some of the projects that benefitted from the funds were on its radar.

This came as the Justice and Legal Affairs Committee (JLAC) threw its weight behind calls to investigate how the funds were used.

This emerged during a meeting between EACC senior officers and members of the parliamentary committee in Naivasha.

According to EACC chairman Bishop David Oginde, the commission will investigate how borrowed funds were utilised in past and present projects in the country.

Addressing the press on the sidelines of the meeting, Oginde said the commission would not work in isolation in fighting graft in the country.

“We are aware of the rising debts and the commission will continue with its investigations on current and past projects where the country could have lost taxpayers cash,” he said.

He denied allegations that the Naivasha retreat was a follow-up to the State House meeting between President William Ruto and Judiciary following allegations of graft.

House committee

JLAC Chair George Murugara said the committee fully supported EACC investigations as to how the cash borrowed by the State was used.

“We are happy that the rising public debt, which stands at over Sh11 trillion, is on EACC radar as the public needs to know how their cash was used,” he said.

The Tharaka MP opposed calls to give EACC prosecutorial powers, noting the commission could not investigate and prosecute at the same time.

This was echoed by EACC CEO Twalik Mbarak, who noted that prosecutorial powers could be misused on political grounds.

He was however quick to add that they were working closely with Office of the Director of Public Prosecutions, noting that low budgetary allocation, insufficient staff in the Judiciary and bad leadership were affecting their work.

“We have counties like Kisumu which are doing very well in the use of public funds but many others are flouting the law and misusing public funds,” he said.

On the recent gas explosion in Embakasi, he said that EACC was not involved in investigations, noting that other government agencies were working on the case.

President Ruto is on record saying public debt has been his biggest headache since last year.

“If for every Sh10 you collect, seven shillings go to repay debts then we have a problem because we are left with three shillings to pay salaries, distribute to the counties and fund development,” the president lamented recently.

By last December, Sh517 billion went to public debt service out of the Sh847 billion raised in taxes between July and December, last year.

This translates to Sh6.10 cents out of every Sh10 collected in taxes, according to the statement of Actual Revenue and Exchequer Issues, published monthly in the Kenya Gazette by National Treasury Cabinet Secretary.

The Controller of Budget (CoB) Margaret Nyakang’o last year told the National Dialogue Committee (Nadco) that the Treasury was borrowing “without a plan” and as it offered little explanation for its borrowing.

Nyakang’o in the National Government Budget Implementation Review Report for the first three months of the Financial Year 2023/2024 said the total public debt as of September 2023 was Sh10.585 trillion.

She noted that the government has surpassed the legal borrowing limit of Sh10 trillion.

The report revealed that out of the Sh10.51 billion debt, external debt comprised Sh5.67 trillion and domestic debt Sh4.92 trillion.

She noted that the growth of public debt has been rapid over the years, adding that it increased by Sh1.44 trillion between December 2022 and September 2023.

The highest public debt growth, the report revealed, was incurred in 2020 and 2023, recording Sh1.23 trillion and Sh1.44 trillion, respectively.

The report indicated that the government’s desire to undertake extensive infrastructural development programmes to spur economic growth has led to high expenditures and substantial fiscal deficits.

The CoB said the planned total expense for FY 2023/24 is Sh4.72 trillion, leading to a fiscal deficit of Sh634.10 billion to be financed through domestic and foreign borrowing.

External debt

The depreciation of the Kenya shilling against the major world currencies, it was noted, has increased the public external debt stock and the rise of the cost of public debt service.

In the first quarter ending September 2023, the government paid a total of Sh154.85 billion to service external debt. This comprised principal repayment of Sh91.75 billion and interest payments of Sh63.09 billion.

The CoB advised that to deal with liquidity challenges due to short-maturity public debt, the National Treasury should prioritise using long-term rather than short-term financing to allow the government time to manage the repayment effectively.