MPs in protest as Jubilee borrows yet another Sh60bn
What you need to know:
- Treasury said the money will go to undisclosed infrastructure projects in the roads, energy, agriculture and water sectors.
President Uhuru Kenyatta has assured the public that the economy is fine and Treasury Cabinet Secretary says the country is experiencing minor “turbulence”.
The allegation of waste was Tuesday lent credence by Parliament when it summoned Devolution Cabinet Secretary Anne Waiguru to explain what appears to be inflated procurement costs in her ministry.
The National Treasury borrowed Sh60 billion from banks last week, only months after floating a bond in Europe to pay off a similar loan.
The Treasury said the money will go to undisclosed infrastructure projects in the roads, energy, agriculture and water sectors.
This latest loan will be even more puzzling to the public, given that the government has not fully explained how it spent Sh250 billion from the Eurobond, which it earlier claimed would also go to infrastructure projects.
President Uhuru Kenyatta has assured the public that the economy is fine and Treasury Cabinet Secretary Henry Rotich says the country is experiencing minor “turbulence”.
WANTON CORRUPTION
Opposition parties, however, have accused the government of mismanaging the economy by incurring too much debt and of wanton corruption and waste.
The allegation of waste was on Tuesday lent credence by Parliament when it summoned Devolution Cabinet Secretary Anne Waiguru to explain what appears to be inflated procurement costs in her ministry.
A statement revealing details of the loan indicated that the Treasury entered into an agreement for the loan with Citi Bank, Standard Bank and Standard Chartered Bank.
The transaction was concluded last week but was only brought to light Tuesday.
SH80 BILLION LOAN
The Treasury was initially looking for Sh80 billion and the Sh60 billion is just the first tranche of the targeted amount.
The rest will be secured from “other sources”, according to Treasury Principal Secretary Kamau Thugge.
“These are not new loans. This is within the context of the Budget approved by Parliament.
"They (funds) will be channelled into infrastructure projects within the law,” Dr Thugge told the Nation in a telephone interview.
EUROBOND MONEY
The Treasury is yet to convincingly explain how it has spent Sh250 billion it borrowed through a Eurobond last year.
The money was meant to fund mega infrastructure projects while cushioning the local market from government borrowing domestically.
However, interest rates shot up to as high as 27 per cent this month, up from less than 20 per cent last year.
The latest loan will attract an interest rate of six per cent and will be repaid within two years, according to Dr Thugge.
A breakdown provided by the National Treasury last week of how the Eurobond money was spent indicates that part of the cash was used to retire an earlier syndicated loan amounting to Sh53 billion.
According to Mr Rotich, a large chunk of the remaining Sh196.92 billion of the Eurobond proceeds was allocated to infrastructure, which received Sh64.37 billion, with the planning department under the Ministry of Devolution receiving another Sh44.57 billion.
ACCOUNTABILITY
Parliament’s Public Accounts Committee (PAC) has demanded that the National Treasury make public all the terms of its latest loan.
Through its chairman, Mr Nicolas Gumbo, the committee said the Treasury must clearly account for the additional loan and how the money will be used.
The PAC also demanded that the Treasury abide by the provisions of the Constitution, which calls for all money raised or received by or on behalf of the national government to be paid to the Consolidated Fund before approval for its use is sought from the Controller of Budget to ensure transparency.
OFFSHORE ACCOUNT
Controller of Budget Agnes Odhiambo last month told MPs that her approval was not sought when the government spent the Sh250 billion.
According to Ms Odhiambo, the money was kept in an offshore account, which was outside her jurisdiction.
On Tuesday, Mr Gumbo said: “The terms for this loan must be comprehensively disclosed to the Kenyan public before the loan is converted for use. We are also demanding a cost/benefit analysis and a list of all the areas it will be channelled into.”
The government has, in the last month, been fighting off claims that the Eurobond money was misused amid unconfirmed allegations that some of it could have been used to pay civil servants’ salaries.
However, Mr Rotich, President Kenyatta and Deputy President William Ruto have all said the money was put to good use.
