MPs approve raising of Kenya's debt ceiling to Ksh.10 trillion
Members of Parliament have approved the lifting of the country’s debt ceiling to Ksh.10 trillion from the current limit of Ksh.9 trillion.
The move, regarded as an interim measure, is expected to allow the government to fully finance the upcoming 2022/2023 budget which has a Ksh.846 billion financing hole which when added to current debt levels surpasses the current Ksh.9 trillion ceiling.
MPs have put aside a previous March proposal by the National Treasury which had sought to set the new debt ceiling at 55 per cent of GDP at present value terms.
“As consultations were going on, it became clear even the previously proposed limit was making it complicated and hence we need to get to a situation where people can relate by stating exactly what the debt ceiling is,” noted the National Assembly Majority Leader Amos Kimunya.
“This is a very interim measure. It is clear the proposed budget estimates in the Budget Policy Statement (BPS) would overshoot the set Ksh.9 trillion debt ceiling. Realistically, we are in a situation where we can't budget unless we adjust our financing limits.”
According to the Chairperson of the National Assembly Committee on Delegated Legislation, the new debt ceiling has been reached on compromise.
“This is a compromise position. Following discussions it has become clear that we need to move away and have a ceiling based on an absolute figure,” he said.
Estimates contained in the 2022 BPS shows the level of public debt is set to hit Ksh.8.6 trillion by the end of this month from Ksh.8.4 trillion at the en of March leaving a narrow window of just Ksh.400 billion to the previous Ksh.9 trillion.
With a higher Ksh.10 trillion limit, the Treasury is expected to now finance the estimated Ksh.846 billion budget deficit in the year to June 2023.
Nevertheless, the next administration will be required to lift the debt ceiling again with Treasury data showing the stock of public debt will surpass the Ksh.10 trillion upper limit before June 2024.
Some MPs have remained opposed to the public debt ceiling adjustment arguing the move is a free pass to higher borrowing which has compounded effects to the life of Wanjiku.
“The issue of public debt is not one we ought to justify and appease ourselves on because it is a burden we are placing on the shoulders of the Kenyan people. As we lay more burden on the people, as a representative, I am obligated to reject this proposal,” noted Kikuyu MP Kimani Ichung’wa.
“We keep digging ourselves deeper into the hole. We’ve gotten excited with debt and have stopped borrowing prudently. We cannot afford to push the can further down the road,” added Dagoretti South MP John Kiarie.
The new debt limit still requires the approval of the Senate.
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