MARGARET NYAKANG'O, THE CONTROLLER OF THE BUDGET, RAISES CONCERNS ABOUT DEBT AMID RUTO'S LOANS.

 Margaret Nyakang'o, the Controller of the Budget, has expressed worries regarding Kenya's debt portfolio, which she says exceeds the legal limit.

 The Public Finance Management Act's stipulated threshold of 55 percent of GDP was exceeded by the debt, according to the CoB's National Government Budget Implementation Review Report covering the first half of the current fiscal year.

 The research states that as of December 31, 2023, Kenya has Ksh11.14 trillion in outstanding debt.

 The Ksh11.14 trillion was made up of Ksh5.5 trillion for the portfolio of domestic debt and Ksh6.09 trillion that is payable to foreign lenders.

As a result, she recommended that the Executive implement several fiscal strategies to guarantee that the debt portfolio is decreased in light of the volatile exchange rate that has contributed to Kenya's debt growth.

Since most loans are taken out in US dollars, the debt portfolio increases anytime the value of the dollar declines relative to the shilling. The national government may borrow money under this Act or any other legislation, but it may not do so more than the amount authorized by Parliament, according to Section 50(2) of the PFMA 2012. Parliament established the ceiling on public debt at five to five percent of the gross domestic debt, or Ksh10 trillion as of December 31, 2023.

 "Notably, the stock of state debt exceeded parliamentary restrictions. To prevent the public debt from continuing to rise, the Controller of Budget advises that fiscal consolidation be used to lower the financing of the deficit budget. A portion of the report stated, "Since public debt is the first charge to the Consolidated Fund, further growth in public debt strains revenue."

 In the meantime, in recent months, President William Ruto has obtained loans from multilateral organizations including the World Bank and the International Monetary Fund (IMF).

 For example, the IMF authorized a credit facility worth Ksh99.9 billion (USD684.7 million) for Kenya in January. It was stated at the time that the funds would be helpful because of the June due USD 2 billion Eurobond.

 Following the government's successful pricing in the Eurobond market throughout the month, the maturing Eurobond was settled early in the week.

 "We successfully settled the buyback of a significant portion of the USD 2 billion 2014 Eurobonds that were scheduled to mature on June 24, 2024, by paying USD 1.5 billion raised on February 12, 2024. This marks a significant financial milestone for Kenya."

 "The successful execution of both the buyback and the new bond issue demonstrates strong investor confidence in Kenya through the international capital markets, and a vote of confidence in the government's overall economic management, particularly our public debt management strategy," Ruto said at the government retreat on February 21.