Treasury blasts Controller of Budget over IMF, World Bank loan interest rates

The National Treasury has dismissed reports by the Controller of Budget that the government acquires loans from the International Monetary Fund (IMF) and World Bank at 14.5 per cent interest rates.

Treasury Cabinet Secretary Prof. Njuguna Ndung’u, in a statement on Friday, termed the assertions by Controller of Budget Margaret Nyakang'o as “sensational and misleading,” saying they are meant to taint the government’s image before the eyes of the public.

CS Ndung’u disputed Nyakang’o’s figures as captured by the media on Thursday reiterating that interest rates for the IMF and World Bank range of loans are not even to half the alleged percentage.

“The Controller's assertions, suggesting exorbitant interest rates of 14.5 per cent, are not only sensational but also inaccurate. Such misleading statements risk causing confusion among Kenyans and straining our relationships with valuable development partners and foreign investors,” the CS said.

“Contrary to the Controller's remarks, Kenya does not hold any loans from the IMF or World Bank with interest rates as high as 14.5 per cent. A cursory examination of both multilaterals' official websites reveals that their lending products range from 0 per cent to a maximum of approximately 6.74 per cent [SOFR + 1.44J.”

The Cabinet Secretary went on to inform the public that Kenya owes the IMF a loan of US$2.68 billion (approx. Ksh.391 billion), and the World Bank US$11.3 billion (approx. Ksh.1.6 trillion), all whose interest rates are below 7 per cent.

“Presently, Kenya's outstanding debt to the IMF amounts to US$2.68 billion, attracting interest rates ranging from 0 to 6.07 percent per annum,” he noted.

“Similarly, debt owed to the World Bank under the concessional IDA Window totals US$11.3 billion, with interest rates varying between 0.35 and 1.39 per cent per annum. Additionally, debts under the non-concessional IBRD window stand at US$1.0 billion, with interest rates ranging from 2.19 to 6.74 per cent per annum.”

While urging Nyakang'o to desist from giving misleading information to the public, the CS underscored that the Office of the Auditor undertakes thorough scrutiny of the loans before and after approval, adding that the process also involves Parliament.

“It's important to note that the Controller of Budget has access to all loan contracts and underlying documentation maintained in the Public Debt Management Office. These documents, along with payment details, loan registers, and statements, undergo annual audits by the Office of the Auditor General,” stated CS Ndung’u.

“Moreover, the utilization of loan proceeds and other public funds is subject to rigorous scrutiny by the Office of the Auditor General, with reports submitted annually to Parliament. We urge the Controller of Budget to disseminate factual information to the public to uphold the integrity of the Constitutional Office.”

On Thursday, while appearing before the National Assembly Committee on Public Debt and Privatisation on the medium-term debt management strategy, Nyakang’o revealed that the loans by the two international bodies might be expensive for the country, though she did not provide any data.

“They baptise their interest…the bulk of which they call service charge, which nobody has ever fathomed,” she said, as quoted by the Nation newspaper.

“Our analysis has revealed that the average interest paid on concessional loans has averaged 14.5 per cent for many years, which is not cheap by any standards.”