Senate team gives nod to raising debt ceiling to Sh10trn
A Senate committee on June 16, 2022 endorsed a proposal to raise the debt ceiling to Sh10 trillion from the current Sh9 trillion and Senators were due to vote on the recommendation last night.
A Senate committee Thursday endorsed a proposal to raise the debt ceiling to Sh10 trillion from the current Sh9 trillion and Senators were due to vote on the recommendation last night.
The National Assembly had approved the new debt ceiling that, however, requires concurrence by the two Houses to become law.
A vote on the proposed new debt ceiling was delayed in the Senate amid concerns about a mounting resistance from Deputy President William Ruto’s allies.
In their last sitting before adjourning indefinitely for the elections, senators said the move was justified, coming as it did after the Covid-19 pandemic ravaged economies globally.
The Delegated Legislation Committee in a report said a number of unfavourable events, including the ongoing Russia-Ukraine war and the appreciation of the dollar, had necessitated raising of the debt ceiling.
Deputy Majority Whip Farhiya Ali, who sits in the committee, said the next government will need some money for administration purposes, which can only be obtained by borrowing.
“Whether it is the Azimio or Kenya Kwanza coalitions that will form the government, there will be a lot of administrative work to do. Let us save them the burden by ensuring that they have some funding to run the government for the first year. Afterwards, they can make their own decisions,” she added.
“As a committee, when we were looking at this report, there were submissions that warned us that if we do not raise the debt limit by one trillion, we will fall short on repayment of loans,” she added.
Unforeseen events
The committee noted that despite assurance by the National Treasury in 2019 that capping the debt ceiling at Sh9 trillion would be okay for the period up to 2024, unforeseen events had cropped up.
The committee expressed concern that the deficit in the Budget Estimates for the 2022/2023 financial year and the medium term would not be fully financed and that development partners may stop funding ongoing projects if the debt ceiling would not be reviewed.
Succession politics played out during the debate, with senators allied to Deputy President William Ruto opposing the move, while those supporting President Uhuru Kenyatta and Azimio la Umoja presidential candidate Raila Odinga supporting the upward review of the public debt cap.
Nandi Senator Samson Cherargei argued that Kenyans have low confidence in the ability of the government to manage public debt, adding that the majority had not been informed why the debt ceiling should be raised.
“The National Treasury has failed. It has not engaged Parliament on public debt management. I hope that the Kenya Kwanza government will be honest in how we manage public debt as per the principles of Chapter 12, Article 201 of the Constitution, on openness and public participation in terms of public debt management,” Mr Cherargei said.
“We need to be honest with Kenyans. When we raise the public debt ceiling to Sh10 trillion, everything will go high, including taxation and the cost of living. I do not mean that presidential candidate called Wajackoyah who wants to smoke something that makes one high,” he added.
Living beyond its means
Nominated senator Isaac Mwaura faulted the government, saying it was living beyond its means.
“Look at our Budget. Currently, we collect about Sh1.6 trillion to Sh1.7 trillion every year. It is not even Sh2 trillion. We have a national budget of over Sh3 trillion every year. That means sooner than later, we still have to raise our public debt ceiling. It also means that we are living way beyond our means,” Mr Mwaura said.
Nominated senator Gertrude Musuruve said the Covid-19 pandemic had affected all socio-economic sectors and businesses.
“Tourism and Education sectors were affected. It is not only in Kenya where things slackened economically. Even other parts of the world were also affected. It is worth noting that if you have to do any big project, you must take loans,” argued Ms Musuruve.
Narok Senator Ledama Olekina supported the raising of the debt ceiling.
“I would not be here supporting the raising of the debt ceiling. However, when you look at what has been happening in this country over the past few years, we have been hit by serious pandemics. It is not quantum physics that the Covid-19 pandemic has had a serious impact on the growth of our economy. The second serious issue is what is happening in Ukraine,” Mr Olekina said.
