The government intends to change the finance law to allow the country to borrow money depending on its capacity to pay debt.
Chair of the National Taskforce of the Public Finance Management Act (PFM) 2012 amendments and Head of Resource Mobilisation Department at the National Treasury Michael Kahiti said the changes seek to peg the public debt in relation to the country’s Gross Domestic Product (GDP).
Currently, the government’s debt ceiling is set at Sh10 trillion by the parliament. According to Kahiti, the limit does not reflect on the country’s ability to repay.
“The limit is Sh10 trillion but the ceiling may not say much because it’s not anchored on the country’s ability to pay, the changes propose a rate of debt that the economy can sustain,” he said.
The chairperson of the task force who was speaking in Machakos during the public participation for the proposed amendments said under the proposals the Cabinet Secretary for National Treasury will be required to appear before the parliament in case the threshold for the borrowing exceeds and table a report on the causes and the measures put in place to remedy the situation and the timelines.
Kahiti also noted that the changes will enable transparency and accountability in public finance management besides cushioning the economy from shocks.
“We are currently reeling from the effects of drought but under the new proposals the country will slow on borrowing during such situations and the national treasury will be required by the law to explain to the public the debt-carrying capital of the country,” added the chairperson.
