This archive report was first published on 14 November 2019.
The National Treasury is reviewing its debt policy to address the growing concern of stalled projects. As of June last year, there were 545 projects valued at Sh366 billion that had stalled, according to a report by the Parliamentary Budget Office.
Under the proposed Debt Policy and Borrowing Framework, the Treasury will regularly review projects undertaken by government agencies and terminate them and the associated loans if necessary. This move aims to give the country some reprieve and prevent further financial strain.
The framework also seeks to prevent politically-connected contractors from exploiting the system by requiring project proposals to be forwarded to the Treasury through the line ministries. This will ensure that all project proposals are thoroughly reviewed and assessed independently.
Kenya's public debt has reached Sh6 trillion, with the government seeking approval for a Sh9 trillion ceiling. The proposed framework aims to restrict the use of commercial loans to profit-making ventures or projects of strategic value, while social projects will be financed through concessional loans.
“Loan facilities of non-performing projects will be reviewed accordingly on a regular basis to allow modification of project implementation or loan cancellation if necessary, as well as to revise the level of new borrowings to be approved in subsequent periods,” said the Treasury in the proposed framework.
“All project proposals should be forwarded to National Treasury through the line ministries and not through financiers and or contractors. The Public Debt Management Office will review all documents and independently assess the cost and benefits analyses submitted and evaluate the sources of financing,” reads the framework.
