Senate okays raising of debt ceiling

 By Hillary Mageka and Mercy Mwai 

President Uhuru Kenyatta has yet again been given the leeway to borrow up to Sh3 trillion more after Senators yesterday voted to raise the public debt ceiling to Sh9 trillion from the current Sh6 trillion.

The senators nod and that given by the National Assembly to remove the cap on public debt, came amid claims of some members being cajoled and promised goodies— and even blackmailed— to pass the motion. 

According to MPs who were called to a meeting two weeks ago, but sought anonymity due to the sensitivity of the matter, some government officials cautioned them against  shooting down the motion because that would affect cash allocated to fund roads in their constituencies.

And now with the amendment to the Public Finance Management (PFM) regulations, the National Treasury now has more legroom to borrow  and push public debt to Sh9.1 trillion starting July 2023 from the current Sh5.8 trillion as at June.

Treasury’s move has caused disquiet among Kenyans, who are already feeling the impact of the current debt against a declining economy. 

When the matter to increase debt was placed before the Parliament for debate, some politicians, civil society and the donor community warned that this may be putting the country at the risk of being mortgaged.

But in a vote taken yesterday afternoon that saw a majority of senators shift goal posts, the Senate supported the Executive in its proposal to increase the national debt ceiling.

This is despite stiff opposition from Deputy President William Ruto and Wiper Party leader Kalonzo Musyoka allies, who claimed the move to expand the debt limit will be auctioning Kenyans to international lenders and meting more suffering on them.

Reduce ceiling

However, bowing to political pressure from the Executive, 37 out of 47 lawmakers who were present in the House on Wednesday afternoon endorsed the National Treasury proposal to change the law and increase the debt ceiling for the State thus further burdening future generations who will repay Kenya’s mounting debt.

And out of the 37, only seven senators, including Moses Wetang’ula (Bungoma), Mutula Kilonzo Jr (Makueni), Aaron Cheruiyot (Kericho) and nominated Senators Milicent Omanga and Victor Prengei opposed the motion.

Commenting on the outcome of the vote, Senator Mutula said: “I, together with chair disagreed with majority opinion. Some of us who have sat in the Finance committee 2013 know about public debt”. 

“My colleagues, what is the problem with telling Treasury to amend this notice to reduce this ceiling to Sh7.5 trillion as recommended by Parliamentary Budget Office (PBO).  We have asked for justification of Sh9 trillion and we have not been given. Some people in these offices think legislators are zombies,” he added.

Cheruiyot, a DP Ruto ally, termed as absurd passage of the motion.

Allocate funds

“What has just happened this afternoon, is absurd. I salute the seven heroes and heroines who stood with poor 47 million Kenyans,” he said.

Passage of the amended PFM regulations means the country will no longer factor its debt caps on 50 per cent of the Gross Domestic Product (GDP), which stands at Sh5.8 trillion (61.8 per cent of GDP). 

After exceeding the ceiling currently set at 50 per cent of the GDP, Acting Treasury Cabinet Secretary Ukur Yatani told senators that the government is presently unable to allocate funds for development projects.

 As the lawmakers agreed to open the window for more borrowing, questions remain on the sustainability of the country’s debt. 

CS Yatani wanted regulation 26(1) amended by deleting the words “50 percent of Gross Domestic Product (GDP) in net present value terms” and substitute it with Sh9 trillion.

However, Parliament’s budget office has raised the alarm over the mounting debt, arguing that the trend of Kenya borrowing to repay debts will be deep-rooted.