Committee on Public Debt and Privatization holds joint session on Public Debt Management, with West Minister Foundation for Democracy

Committee on Public Debt and Privatization holds joint session on Public Debt Management, with West Minister Foundation for Democracy

𝐌𝐨𝐦𝐛𝐚𝐬𝐚 𝐂𝐨𝐮𝐧𝐭𝐲
𝐓𝐡𝐮𝐫𝐬𝐝𝐚𝐲 𝟔𝐭𝐡 𝐅𝐞𝐛𝐫𝐮𝐚𝐫𝐲, 𝟐𝟎𝟐𝟓

The National Assembly Committee on Public Debt and Privatization has held a joint workshop focusing on Public Debt Management, with West Minister Foundation for Democracy (WDF). 

In a session chaired by the Committee’s Vice-chairperson, Hon. Makali Mulu (Kitui Central), the Committee first took a look into a decade review of Kenya’s Public Debt Stock. The debt which stood at Kshs 10.8 trillion at September 2024 represents 63% of GDP in nominal terms and 62% of GDP in Present Value (PV) terms, exceeding the 55% PV-to-GDP threshold set for October 2028. 

The June 2024 stock which stood at Kshs. 10.6 trillion composed of External debt of Kshs. 5.15 tn. and domestic debt Kshs. 5.4 tn. at 49% and 51 percent, respectively.

Mr. Lars Jessen, the lead Debt Specialist World Bank, took the Members through the core objectives of Public Debt Management where they examined the fundamental goals of Public Debt Management including ensuring long term fiscal sustainability, minimizing borrowing costs and mitigating financial risks.

Mr. Jessen explored how effective debt management underpins macro-economic stability, supports economic growth, bolsters investor confidence and mitigates potential contingent liabilities.

On his part, Dr. Ben Cormier, a Professor at University of Strathclyde, Glasgow, took the Members through the institutional framework for effective debt management. The session explored the design and functionality of institutional framework for Debt Management from global perspective.

It also focused on the role of Debt Management Offices (DMOs), role of Members of Parliament and their interactions during the annual borrowing process.

While reacting to the presentations, Hon. Mulu, wanted to know how as a Committee they can harmonize the different figures which he says they get as a Committee from stakeholders involved whenever they summon them on matter public debt.

“Mr. Jessen you earlier stated that the solution to our debt issues as country is growing our economy but look at the challenge Kenya is facing at the moment in terms of revenue generation, how is it possible then for us,” Hon. Mulu asked.

Further, according to Hon. Mulu, debt repayment should be an annual activity, citing the case of the 2014 Eurobond whose repayment was due on 2024 and had the whole country worrying where the money would come from.

Hon. Daniel Manduku (Nyaribari Masaba) also wanted to know the issue of Pending Bills and whether an instrument can be created by government that will act as a promissory note that government owes you money.

However, according to Mr. Jessen, Pending Debt is a bad debt practice as it signifies the government’s inability to pay its debt and also the cost of dollar might increase as a result of no repayment.

The Committee was also taken through; Market access and whether transparency and good debt management practices matter, sovereign debt management and liability management and country comparison of public debt management policies.