Emgwen MP Alexander Kosgey on August 30 proposed an amendment to The Public Finance Management Act that will place a Ksh6 trillion ceiling on debt levels that will in turn curb the government’s borrowing tendencies that have sunk the country into a Ksh5.1 trillion debt.
Kenya’s debt has been on an upward trajectory with the government maintaining that borrowing is inevitable if the country is to meet its development goals.
The legislator says that the country’s debt levels need to be checked as they are spiraling out of control.
He wants the debt ceiling to either be slightly above or just below the Ksh6 trillion that he is proposing.
“The Public Finance Management Act is amended in section 50 by deleting the words a ‘limit set by Parliament’ appearing at the end of subsection (2) and substituting thereof the words “six trillion shillings,’” said Mr. Kosgey while proposing the amendment.
In February, Deputy President William Ruto defended the government’s borrowing spree saying that Kenyans should have faith in the government’s fiscal discipline.
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“There’s been a lot of debate on the government’s borrowing. I want to assure Kenyans that before borrowing, the government made projections on what we need to spend on and our ability to pay that loan. I can reassure Kenyans that we want to initiate development projects that will spark economic growth in the country,”said Mr. Ruto.
At the time the country’s debt stood at Ksh.4.8 trillion.
A week before the Deputy President weighed in on the matter, global rating agency Moody’s Investors Service had downgraded Kenya’s rating owing to the rising debt levels.
The rating agency further said that it it expected Kenya’s debt to increase as the government increased its spending while trying to boost revenue and trying to cope with higher interest markets.
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In May, IMF First Deputy Director David Lipton during a visit to the country told MPs that the country’s debt burden was fast becoming unsustainable.
Speculation was also rife that International Monetary Fund (IMF) put brakes on Kenya’s credit facility seven months ago due to non compliance with fiscal targets.
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