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Each citizen owes Sh100,000 as State borrowing appetite soars
Auditor General report paints grim image even as underperforming State agencies continue to gobble up cash from the Exchequer.

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Each Kenyan owes the State lenders Sh100,029 as the government appetite for borrowing drives up the public debt to Sh4.8 trillion.

According to the Auditor General Edward Ouko’s report for the 2017/18 financial year, the outstanding public debt has increased from Sh2.25 trillion in 2013/14 the financial year to Sh4.80 trillion in 2017/18. 

The revelation came as it emerged that  various government departments and parastatals owe the National government  799.8 billion as at June, last year. 

According to the report, the public debt increased by 27 per cent in 2013/14 financial year to 2.3 trillion while in 2014/15 fiscal year, it rose by 19 per cent to stand at Sh2.7 trillion. In the 2015/16, the debt soared by 27 per cent to hit Sh3.4 trillion and a 24 per cent increase to stand at Sh4.2 trillion in 2016/17 financial year. 

At the time of audit in 2017/ 18 financial, the public debt stood at Sh4.8 trillion.

The auditor attributed the growth in public debt to the disbursements of new loans to the government by its development partners as well as domestic borrowings through Treasury Bonds and Bills to fund the budget.

He warned, however, that the summary statement of public debt did not disclose disbursements and repayments during the period under review, which made it difficult to confirm the accuracy of the closing balance.

The Auditor General also raised various issues touching on the maintenance of the public debt records, including the variations in figures reflected in the loan registers, financial statements and other supporting schedules as well as unsupported prior years’ adjustments. 

On the loans owed by parastatals, the audit report indicates that the new amount represents an increase of Sh6 billion or a 0.76 per cent of the total outstanding loan.

The Sh799.8 billion figure includes new loans issued in the 2017/18, amounting to  Sh55.98 billion.

“Non-repayment has led to continued write-offs of the loans as bad debts and eventual loss of public funds,” reads the report in part.

Failing institutions

During the year under review, only Sh2.85 billion of the loans given to State agencies had been recovered, while loans amounting to Sh4.25 billion were written off.  

The auditor further indicated that failing institutions continued to receive additional funding even when it was obvious they were under-performing, casting doubt on the criteria used to determine the advancement of additional loans.

Out of the 799.8 billion loan, for instance, Sh47.5 billion was due for recovery from 20 institutions, but they were yet to honour the same.

The organisations include, Coast Water Service Board Sh7 billion, East African Sugar Industries Limited, Muhoroni (Sh177.1 million), Halal Meat Products (Sh27.7 million), Kenya Meat Commission (Sh940.2) million, Kenya Tourist Development Corporation (Sh48 million), Kenya Urban Transport Various Towns (Sh40.7 million), Lake Victoria South Water Services Board (Sh3 billion) and Lake Victoria North Water Services Board (Sh2.8 billion).

Others are  Miwani Outgrowers Mills Limited (Sh6.6 billion), Miwani Sugar Company (1989) Limited (Sh16 million), Miwani Sugar Mills Limited (Sh78 million), Mumias Sugar Company Limited (Sh2.5 billion), National Irrigation Board (Sh2.3 billion), National Water Conservation and Pipeline Corporation (Sh2.5 billion), Northern Water Services Board (Sh5.4 billion), Rural Electrification Authority (Sh13.6 billion), Tana Water Services Board (Sh1.8 billion), Tanathi Water Services Board (Sh4.4 billion), Water Resource Management (Sh 362.6 million) and Agricultural Finance Corporation (Sh562.3 million).

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