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Case for apt managing of public debt

Tuesday November 27 2018

A currency dealer counts Kenya shillings at a money exchange counter in Nairobi.

A currency dealer counts Kenya shillings at a money exchange counter in Nairobi. By the end of June, the national debt, including the publicly guaranteed borrowing, stood at a whopping Sh5.1 trillion. PHOTO | FILE | NATION MEDIA GROUP 

MUSALIA MUDAVADI
By MUSALIA MUDAVADI
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By the end of June, the national debt, including the publicly guaranteed borrowing, stood at a whopping Sh5.1 trillion. The debt is made up of some Sh2.5 trillion in domestic and Sh2.6 trillion external debt. This is according to the latest 2018 Annual Public Debt Management Report published by the National Treasury.

Of special note, however, is the fact that the national debt was only Sh873.5 billion in 2008, and it has grown in leaps and bounds to a staggering Sh5.1 trillion by mid this year. It is evident that the Jubilee administration has gone on a borrowing spree and the party continues.

To effectively manage this ballooning public debt, a number of urgent interventions are required.

ASSET RECOVERY

The function of asset tracing and recovery should be intensified and the proceeds committed to the retirement of part of the expensive public debt.

In this task, the agencies concerned must be adequately resourced to enhance their efficiency and performance in this crucial undertaking.

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The national government must stop merely slashing the budgets of the 47 counties and instead address wastage public of resource.

This has in recent years been evident in the various sections of the within national government.

Resource allocation should put into consideration the absorption capacity of the various ministries and government departments.

Equally, the disbursements to the counties should be made on time to enable the counties address their budget priorities and implement planned projects. This will stem the accumulation of pending bills.

HOSTAGE

The National Assembly, through the House Budget Committee, should stop focusing on the expenditure side and holding the Executive hostage without also focusing on the funding sources of the budget. This applies to the county assemblies that have sometimes held county executives hostage.

This has delayed the approval of budgets, allowing absorption and poor service delivery.

Once the National Debt Office, through the National Treasury publishes the Annual Debt Management Report containing all information on the public debt, Parliament should interrogate these accounts and ensure public participation that helps Kenyans to appreciate the cost and pace of development.

The Public Finance Management (PFM) Act of 2015, which took away the powers of Parliament to set debt ceilings and to query Treasury, should be amended to reinstate these powers for a more accountable Treasury.

HEALTHY CASH-FLOWS

The Treasury should start analysing its debt portfolio with various lenders in anticipation of possible rescheduling to ensure healthy cash-flows for the country. It should also address possible debt default that could have far-reaching adverse effects on the national economy.

The Treasury has already announced that it is putting on hold new projects and we can only hope that the leaders’ actions will match their words.

There is no need to stretch the country with all sorts of incomplete projects that drain the Exchequer and tied own the much-needed funds. The public is tired of the “tumetenga, tutatenga, tungetenga” (we have set aside, we will set aside and we would have set aside) development language and now wants to see projects being completed, and the benefits accrue to them.

CHALLENGE

And finally, seeing the challenge of the Office of the Auditor-General to conduct value-for-money audits and seeing the challenge of the Treasury to fully manage projects, the Institute of Certified Public Accountants of Kenya (ICPAK) should consider lobbying for the establishment of a Public Debt Management Commission.

The commission should then have representative membership from professional bodies that assure it of independence a kin to that of the office of the Auditor-General.

The mandate of this commission should include reviewing and making policy recommendations to best manage public debt; overseeing value for money audits in the national and county governments and agency levels.

It should, once established, build the capacity for monitoring and evaluation and also support the government in ensuring that the principle of national sovereignty guarantee is observed in debt obligations.

Mr Mudavadi, the ANC Party Leader and National Super Alliance co-principal and founder, is also a former Finance minister. He made similar remarks in his recent address during the ICPAK Public Finance and Taxation Conference in Mombasa

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