A parliamentary committee has approved the Treasury’s bid to double the country’s external debt ceiling to Sh2.5 trillion.
The Finance, Planning and Trade committee endorsed the Treasury’s proposals to increase the debt ceiling to accommodate huge capital inflows into the country, including Sh327 billion for the standard gauge railway.
The Parliamentary Budget Office (BPO), which advises MPs on economic and fiscal policies, has questioned the Treasury’s push to raise the debt ceiling from the current Sh1.2 trillion and warned of high interest payment burden in the next five years.
“The committee recommends that the House approves the increase of total indebtedness for the time being,” the committee said. The Treasury say it wants to double the government’s external debt ceiling to finance infrastructure projects.
“We request the moving up of ceiling to accommodate expected inflows. We are proposing to tie the ceiling to the size of economy rather than nominal value which is easily overtaken by events,” Treasury secretary Henry Rotich told Parliament last week.
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