On Friday, April 28, Treasury Cabinet Secretary Njuguna Ndung’u struggled to persuade members of parliament to change the debt ceiling and replace the numerical valuation with the Gross Domestic Product.
The CS proposed amending the Public Finance Management (PFM) Act 2012 while appearing before the Committees on Budget and Appropriations, Public Debt and Privatisation, and the Departmental Committee on Finance and National Planning.
The CS proposed removing the current numerical debt ceiling of Ksh 10 trillion and replacing it with a debt ratio of 55% of the present value of GDP.
However, the MPs directed the CS to investigate calculating the debt ceiling based on revenue collected.
“We cannot allow you to continue to accumulate debt in a situation where you are unable to pay your salaries on time.” “You are being unjust,” said Samuel Atandi (Alego Usonga).
Some questioned why the CS sought the adjustment, claiming that the country was already in overdraft.
“I’m not sure why you’re recommending a 55% ceiling when you’ve indicated we’re at 62.1 percent,” Danson Mwashako (Wundayi) asked.
In his defense, the CS noted that the borrowing headroom of Ksh610 billion was against a projected fiscal deficit of Ksh720 billion for the financial year 2023/24.
“The country has to adopt a practical debt management policy,” the CS added.
Furthermore, Njuguna explained that the proposed debt anchor framework conforms with the international best practices for settling debt limits and provides debt sustainability.
The CS vowed to engage the lawmakers to help them understand the new framework so that they may approve it once it is tabled in Parliament for consideration.
