The National Treasury has asked members of parliament to raise the debt ceiling to Sh. 10 trillion. According to Treasury cabinet secretary Ukur Yatani, the raising of the debt ceiling will allow the government to borrow Sh. 846 billion to fund the national budget in the financial year starting July 1, 2022.
The debt ceiling was raised to Sh. 9 trillion from Sh. 6 trillion in October 2019. CS Yatani has published a gazette notice to amend Section 26 of the Public Finance Management Act, 2015 to raise the debt ceiling.
This is as he pushes a separate Bill to amend the Public Finance Management Act to change the debt cap to a percentage of GDP.
“Pursuant to the provisions of Section 50(2) of the Act, the public debt shall not exceed ten trillion shillings,” he said in the legal notice dated May 26.
According to a report that appeared in a local daily, the raising of the debt ceiling comes barely two months after the leader of the majority in parliament Amos Kimunya successfully pushed an amendment to the 2022/23 Budget Policy Statement (PBS).
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The amendment allowed the National Treasury to amend the law to accommodate the bigger budget deficit.
Kenya’s debts have been on the rise, with the government expected to spend Sh. 1.36 trillion annually in the year starting July for debt repayment. This will be an increase from the Sh. 1.15 trillion in the current fiscal period.
This means that the country will be spending Sh. 3.74 billion daily to repay debts. The debt costs will for the first time in Kenya’s history surpass the recurrent expenditure, which is expected to stand at Sh. 1.34 trillion in the coming fiscal year up from the current Sh. 1.27 trillion. This will be equivalent to Sh. 6 out of every Sh. 10 that will be collected from taxes.
