Icpak cautions State against using debt for recurrent expenditure
Thursday, October 17th, 2019
Institute of Certified Public Accountants of Kenya (Icpak) chairperson Rose Mwaura has urged the government to prudently use borrowed funds in financing development projects as opposed to recurrent expenditure.
Speaking yesterday in Diani during the fifth annual Icpak conference, Mwaura said using borrowed funds on recurrent expenditure would shore up public debt.
“Borrowed funds have quadrupled over the past seven years and as a result, the stock of debt has had an annualised growth rate of 16 per cent since June 2013 reaching Sh5.8 trillion as at the end of June this year,” said Mwaura.
She said if the debt was used to finance development, it would be sustainable in the long run.
“According to recent Central Bank of Kenya statistics, the country’s debt includes Sh3.01 trillion from external sources and Sh2.8 trillion domestic debt as at June 30. The country, therefore, faces a moderate risk of external debt distress,” she said. The chairperson, however, said the government should live within its budget rather than taking up unnecessary loans.
“Members of Parliament raised the debt ceiling to Sh9 trillion which is a reflection of the government’s increasing appetite for loans despite concerns over the pace at which the debt is accumulating,” she said.
Mwaura, however, added that Icpak appreciates the government for prioritising fiscal consolidation where Treasury has controlled costs around foreign travel, hospitality, cleaning and having regular payroll register audits frequently.
“We are happy to see the government is recognising the need for fiscal consolidation to reduce deficit. We must start living within our means and acknowledge the limitations of our revenue collection,” she said.
– Munira Mandano