Committee on Public Debt examines special audit report on servicing external loans in Kenya

Committee on Public Debt examines special audit report on servicing external loans in Kenya

𝐏𝐚𝐫𝐥𝐢𝐚𝐦𝐞𝐧𝐭 𝐁𝐮𝐢𝐥𝐝𝐢𝐧𝐠𝐬,
𝐖𝐞𝐝𝐧𝐞𝐬𝐝𝐚𝐲 𝟐𝟕𝐭𝐡 𝐍𝐨𝐯𝐞𝐦𝐛𝐞𝐫, 𝟐𝟎𝟐𝟒

The Committee on Public Debt and Privatization has raised concerns over the discrepancies between the budgeted amount and the actual amount paid in the debt servicing of external loans in Kenya by the Central Bank of Kenya.

This was during a meeting with the Office of Auditor General (AOG) who presented a special audit report for the Financial Years 2020/21, 2021/22 and 2022/23 to the Committee.

In the session chaired by the Committee Vice Chairperson, Hon. Makali Mulu (Kitui Central), Mr. Gideon Mokaya the Director of public debt audits told the Committee that in the period under review, estimates were overbudgeted by an average of 10 percent. 

According to Mr. Mokaya, the 10 % is above the 5 % provision to cater for fluctuations as the loan falls due which is usually determined as an approximation of the long-term depreciation of the Kenya Shilling against other currencies.

“The 10% is as a result of 8%, 22% and 0% overbudgeting in the FYs 2020/21, 2021/22 and 2022/24 respectively. As AOG, we recommended that there should be transparency on how to arrive at the percent provisioning to cater for foreign currency fluctuations,” Mr. Mokaya told the Committee.

Reacting to the presentation, Hon. Joseph Makilap (Baringo North) asked the OAG what they are doing to ensure that the trend of over budgeting does not occur again, adding that it is against the law to procure services that is beyond your budget.

The OAG also noted that during the period under review, there was an inadequate adherence to loan due dates while servicing the debt. In the sampled 90 Payment Advices (PAs) spread across the 3-year period only 29 Pas were paid within the due dates, 11 Pas delayed by a range period of 3 to 330days while 50 PAs were between 3 to 14 days.

Mr. Mokaya told the Members that in their defense, the National Treasury disclosed to them that they only settle obligations upon receipt of demand notes or bills.

Hon. Aden Daudi (Wajir East) asked the OAG if the delay in repayment costs Kenya more saying that it could be overlooked if it does not.

In his response, Mr. Mokaya confirmed that indeed the delay aspect attracts some charges. He however, said that they could not state the amount the country has incurred in the period over review since the commitment fee and delayed interest payment had been bundled together

After hearing the presentation on all the twenty-seven issues detailed in the audit report, Hon. Mulu directed that the Committee will summon the National Treasury to appear before it to answer the arising questions.