Public unease about the country’s ballooning Sh4 trillion-plus public debt has returned strongly to the centre stage as more Kenyans raise concern about possible impact of the government’s controversial borrowing habits on the struggling economy. This comes after Treasury Cabinet Secretary Henry Rotich recently revealed plans to borrow more big loans, including a “quick-fix” loan, not for infrastructural and economic development, but to repay a Sh77.2 billion syndicated loan taken in 2015.
A second Eurobond is also on the cards to help the government finance its operations and debt obligations, thereby joining the long list of loans the government has borrowed in the local and international markets in the recent past including the controversial Sh200 billion Eurobond of June 2014, part of which was used to repay a Sh60 billion syndicated loan.
Economists have highlighted various issues of concern surrounding the government’s loan procurement and debt management practice including borrowing of loans to pay other loans or to finance non-development expenditures.
Other issues of concern have been the continued heavy reliance on expensive loans from commercial banks locally and internationally, possible misuse and wastage of proceeds from the loans, the sustainability of the debt burden, government ability to repay the loans following extensions of repayment periods at higher interest rates among other vital issues.
But equally of concern to many Kenyans is whether Parliament is really playing its role of offering the requisite checks and balances to the Executive’s appetite for loans or Kenyans are paying the prize of a parliament that has been reduced to a “Yes man” of the executive.
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A review of the Constitution and the Public Finance Management Act shows that legislators have considerable oversight powers to scrutinise and check government borrowing to ensure it is confined within reasonable limits to avoid saddling taxpayers with unnecessary and unsustainable debt burden.
Legislators have the powers to hold the Executive accountable with regard to loans to be procured, projects to be financed by the loans, prudent use of proceeds from loans, the ability of servicing of the loans to ensure taxpayers are protected from excessive and frivolous borrowing.
The scrutiny is meant to allow the people’s representatives to determine if there is need to borrow to finance certain projects and whether doing so meets the minimum threshold of adding value to Kenyans.
Legislators are expected to put the interests of the taxpayers first since they are the ones who will repay the loans through the taxes they pay.
But it appears that in the current and previous Parliament, in which the ruling party or coalition enjoys the majority, the required scrutiny of loans has not and is not happening, leaving the Executive with a free hand to borrow with abandon and struggling taxpayers left to foot the bill.
Kenyans have not yet seen Parliament ask tough questions before loans are procured by the Executive or demand accountability for those already procured.
This failure by Parliament is yet another disturbing indication of the perils of ruling parties enjoying majorities in legislative bodies making legislators subservient to the whims of the Executive.
Before the provision of Parliamentary oversight over government borrowing was expressly inserted in the law books, the Executive had a free hand to procure loans, a practice that has resulted in billions of shillings of debts for dubious projects that have had little or no returns to Kenyans.
In addition, much of the funds are suspected to have been diverted to offshore bank accounts of corrupt government officials.
Several years ago before the subject of public debt had become a major public issue, some civil society groups requested a forensic audit of the country’s debt register since independence to determine the value for money for the debts procured so far. It may be worthwhile to reconsider the proposal at this time of growing public unease about the ballooning public debt.
In addition, more public participation is needed before the Executive procures loans to enable Kenyans have more say in the process, since they are the ones who will shoulder the heavy burden of paying them back.
It is time the procurement of loans is subjected to a process like the law making where Kenyans are allowed to share their views before government borrows money on their behalf. This provision will enhance transparency and help minimise the unjustifiable appetite for debt by the government.
-The writer is a media practitioner based in Nairobi. [email protected]