Kenya’s “huge” debt is alarming and should be well-managed, accountants have said.
The Institute of Certified Public Accountants of Kenya (ICPAK) said the prevailing debt points to a need to relook the country’s strategy.
Addressing journalists in Kisumu on Saturday, ICPAK officials said Kenya should instil prudence in the country’s debt management strategy.
The officials were led by Chairman Julius Mwatu, Deputy Rose Mwaura, Chief Executive Officer (CEO) Edwin Makori and Nyanza regional Chairman William Onyango.
“The Institute is of the opinion that we must strive to negotiate debt at concessionary terms covering both the cost and tenure of resulting debt.
“On average, the debt tenure of public loan stock in Kenya is between 15 and 20 years whereas optimality is achieved at longer loan tenures,” Mr Mwatu said.
He said the overall public debt as at December 2017 stood at Sh4.573 trillion.
“This comprises of Sh2.22 trillion of domestic debt and Sh2.353 of external debt.
“In Budget Policy Statement 2018, the National Treasury is proposing that out of the Sh1.68 trillion that is budgeted as ordinary revenue in the FY 2018/19, Sh688 billion shall be applied to service existing public debt,” Mr Mwatu added.
This, the ICPAK boss said, translates to 40 percent of ordinary revenues going into servicing debt.
“By the very spending intentions of government in the FY 2018/19, it is observed the overall spending deficit shall stand at 7.2% of GDP, which Treasury proposes to plug through additional borrowing further exacerbating the public debt problem,” states the official.
GROWTH VS DEBT
Mr Mwatu said the rate at which the economy is accumulating public debt is higher than the rate of growth of the economy.
“This points to a mismatch between the fiscal policy and the broader economic policy, a situation which should be evaluated critically to assess the sustainability levels of public debt,” said the ICPAK boss.
“Consequently, we urge the government to keep an eye on the red flags and warning indicators to ensure that the country is not caught-up in a debt crisis in the near future.”
The officials spoke at a presser in Acacia Premier Hotel in Kisumu during the opening of the County’s physical branch.
They also lauded the pact between President Uhuru Kenyatta and ODM leader Raila Odinga, saying it would lead to stability.
ICPAK also proposed that Parliament, through the Public Accounts Committee (PAC), robustly enforce implementation of the Auditor-General and Controller of Budget recommendations to ensure prudent use of public resources.
“County Assemblies should provide appropriate oversight over the County Executive and any other county executive organs. In particular, follow-up should be made on implementation of the Auditor-General’s recommendations.
“Establishment of robust audit committees at both the County Government and County Assembly level.
“We urge other accountability institutions, namely, Ethics and Anti-Corruption Commissions (EACC) and the Directorate of Public Prosecutions (DPP) to follow up and act, particularly on suspected economic crimes and outright pilferage of resources as pointed out the Auditor-General’s report,” ICPAK said.
The officials urged the public, professionals, the church, media and the private sector to join hands to demand greater accountability from elected leaders.