Financial prudence will bring down national debt, senators say

Senators have warned national and county governments against pilferage of public resources if the country is to manage the Sh11.2 trillion public debt.

While debating the Medium Term Debt (MTDs) Management strategy, the legislators told the National Treasury to commit to bringing down the Present Value (PV) of debt as a percentage of Gross Domestic Product (GDP) from 67.2 to 55 per cent over five years per the requirements of Section 50 of the Public Finance Management Act.

While tabling the report in the House, Mombasa Senator Mohammed Faki (pictured) said that at the end of June 2023, the nominal amount of public and publicly guaranteed debt was Sh10.278 trillion, or 70.8 per cent of the GDP. This, he said, comprises an external debt stock of Sh5.446 trillion and a domestic debt of Sh4.832 trillion.

While supporting the motion for the adoption of the report Migori Senator Eddy Oketch said most of the money borrowed goes to financing recurrent budget.

“We are ranging between 65 and 68 percent of our national Budget going on recurrent budgets. We are just financing a budget that is not on development. If we continue borrowing, as a country, to eat, buy Panadol for the workforce and to just consume, then we shall end up in trouble,” said Oketch.

Dan Maanzo (Makueni) said that the biggest issue is how to manage the debt.

“Every African country is heavily in debt. There is nothing wrong with borrowing, so long as the money goes to what it was borrowed for. Unfortunately, we have been borrowing money, but since we do not have proper structures, the country loses money through corruption.

"Corruption barons are courageous of stealing from public coffers borrowed money, which taxpayers are struggling to pay,” said Maanzo.

Wycliff Kisang (Elgeyo Marakwet) called for better management of public debt.

“When the Government borrows internally, it means that our businesses do not have access to loans,” he said.