Parliament Rejects State’s Bid to Increase Debt Ceiling to Ksh. 12 Trillion

The Parliamentary Budget Committee has turned down the government’s plan to raise the debt ceiling to 12 trillion shillings.

This move has killed the administration’s intention to borrow more before the August General-Election.

To meet its financial obligations, the government has been seeking to increase the debt ceiling from 9 trillion shillings.

However, National Assembly’s Budget and Appropriations Committee chaired by Kieni Member of Parliament Kanini Kega argues that the request by the National Treasury to be allowed to cover a deficit of 846 billion in the 2022/23 financial year through borrowing is not acceptable.

The request was made in the Budget Policy Statement presented in the House in December 2021, and was then forwarded to the committee for examination before being formally tabled for debate by MPs.

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“The committee is concerned that the BPS had proposed an overall deficit of 846 billion which, if approved, has a potential to breach the approved debt ceiling of 9 trillion shillings,” the committee said in its report.

As projected by the stakeholders, the stock of debt will amount to 8.6 trillion shillings by the end of June 2022. This means the only amount the government can borrow in the next financial year without an amendment of the ceiling will be 400 billion shillings.

Based on these figures and facts, the committee, therefore, recommends that the overall deficit be limited to 400 billion shillings.

As of September 2021, the Central Bank of Kenya’s (CBK) weekly bulletin indicated that the country’s total debt stood at 7.99 trillion shillings.

Public and publicly guaranteed external debt stands at 4.1 trillion shillings, while domestic debt at 3.9 trillion shillings. Commercial loans account for about 30 percent of external loans while bilateral debts take up 30 percent as well.