Parliament gangs against Treasury in a proposal to alter the debt ceiling
Parliament rejects a proposal by CS National Treasury to alter the debt ceiling in order to be able to borrow more
Parliament rejects a proposal by CS National Treasury to alter the debt ceiling in order to be able to borrow more.
Treasury Cabinet Secretary Njuguna Ndung’u, on Friday, April 28, struggled to convince members of parliament to alter the debt ceiling and replace the numerical valuation with the Gross Domestic Product.
While appearing before the Committees on Budget and Appropriations, Public Debt and Privatization, and the Departmental Committee on Finance and National Planning, the CS proposed the amendment of the Public Finance Management (PFM) Act 2012.
Prof. Njuguna Ndung’u has proposed the amendment of the Public Finance Management (PFM) Act 2012 and the attendant regulations to replace the current numerical debt ceiling of Ksh 10 trillion with a debt ratio of 55 percent present value of the Gross Domestic Product (GDP).
However, the MPs tasked the CS to explore the calculation of the debt ceiling based on the revenue collected.
“We cannot allow you to continue to pile more debt in a situation where you can not pay salaries in time. You are being unfair,” Samuel Atandi (Alego Usonga) stated.
Some questioned why the CS sought to make the adjustment arguing that the country was already in excess debt.
“I do not understand why you are recommending a 55 percent ceiling yet you have indicated we are at 62.1 percent,” Danson Mwashako (Wundayi) posed.
A section of the lawmakers averred that it were better if the National Treasury were to explore the calculation of the debt ceiling based on the revenue collected.
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In his response, Prof. Ndung’u told the legislators that with a borrowing headroom of only Kshs. 610 billion against a projected fiscal deficit of Ksh. 720 billion for the FY 2023/24, the country has to adopt a practical debt management policy.
He further told the Committee that the proposed debt anchor framework conforms with the international best practices in settling debt limits and provides for debt sustainability. He noted that the suggested framework would also allow Parliament to tighten its grip on public debt management.
Faced with a barrage of questions demanding a justification for the proposed framework, Prof. Ndung’u told the legislators that going forward, he had elected to hold several engagements with the three committees, to have them understand the new framework so they would become his ambassadors once it is tabled in the House for consideration.
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