Henry Rotich defends Sh2.5trn debt plan

Treasury Cabinet Secretary Henry Rotich on Thursday evening defended the proposal to double the external debt ceiling, saying, it will unlock funding for major infrastructure projects over the next three to five years.

Mr Rotich told Parliament’s Finance, Trade and Planning Committee that the government has been assured of loans totalling more than $10 billion (Sh860 billion) over the next four years and increasing the debt ceiling would ensure the loans were within the law.

“If we approve a lower figure, we’ll have to come back and ask for more. So we thought, why not have enough until 2017?” Mr Rotich said.

The CS said the World Bank has committed to make $4 billion available to Kenya over the next four years; the African Development Bank $2 billion and the European Union $4 billion.

This money would be used to fund the construction of a crude oil pipeline from Turkana to Lamu and a power transmission line from the coal power plant in Lamu to Kitui.

Others are the Galana-Kulalu and other irrigation schemes, the development of geothermal power and a power line through Kenya from Ethiopia to Tanzania.

He said domestic borrowing was not feasible.

“If we went the domestic way, it would probably take 100 years to get development in this country,” the minister said.

In future, he said, the external debt ceiling would be pegged to the size of the economy.

The CS said the Treasury was keen to have the increased debt ceiling approved in a hurry.

This is because the loan from the China Exim Bank, intended to fund the construction of the standard gauge railway is to be released soon and in larger tranches than originally expected.  

Earlier, Parliament’s budget experts questioned the rationale behind the bid to increase the country’s external debt ceiling to Sh2.5 trillion, more than double the current Sh1.2 trillion.

The Parliamentary Budget Office told the Finance, Trade and Planning Committee that the proposed ceiling was “too high”.