Parliament in session: MPs on June 27, 2012 asked for information on the level of debt and whether counties would inherit any loans after next year’s elections. Photo/File
The total external debt owed and guaranteed by the government over the last eight years stands at Sh304.3 billion.
Finance minister Njeru Githae said the amount was obtained from creditors, including the World Bank, the International Monetary Fund (IMF) and the government of Japan.
Mr Githae said the total public debt is manageable and sustainable and currently stands at 47 per cent of the Gross Domestic Product (GDP).
“If it goes beyond 50 per cent of the GDP, then it will become unsustainable. The government is not incurring any reckless borrowing. The Budget deficit currently stands at six per cent,” Mr Githae said.
He told Parliament the repayment of the loans would not affect the planned county governments as it is charged on the Consolidated Fund Services.
Responding to MPs’ queries over the use of the money, Mr Githae said projects using donor funds are prioritised in line with the country’s development agenda and are distributed evenly across Kenya.
Wajir South MP Mohamed Sirat demanded to know how much the country owed donors since 2003 and whether there is risk that some counties may be forced to repay the loans.
The minister gave a schedule of loans secured by the government of Kenya from January 2003 to end of October 2011 indicating the projects funded, the creditor and borrower of the loans and how outstanding debt was disbursed.
The schedule contains national projects that have since been funded through loans from organisations such as the International Fund for Agriculture, International Development Association, African Development Fund, GTZ, Economic Development Co-operation Fund-Korea and European Investment Bank, among others.
The list shows that a total of Sh304, 284, 619, 597.23 was guaranteed over the last eight years.
Among the key companies the government guaranteed loans are the Kenya Electricity Generating Company (KenGen) and the Kenya Ports Authority (KPA).
The government guaranteed KenGen loans for five projects— three with funding from Japanese government and two funded by Germany (GTZ).
The KenGen projects are the Sondu Miriu Hydro Power II (Sh13.3 billion), Sondu-Miriu hydropower project, Sang’oro power plant (Sh4.2bn), rehabilitation and expansion of Kindaruma hydropower plant (39.1 billion euros), Olkaria 1Unit 4 and 5 geothermal power project (Japanese Yen 29.5b) and the rehabilitation and upgrade of the Olkaria geothermal plant (60 million euros).
Mombasa Port Development programme got a loan guarantee through the government of Sh1.3 billion from Japan.
This money was borrowed through the Kenya Ports Authority in January, 2007. MPs, however, expressed concerns over the manner in which the government allocates the borrowed money for development claiming some areas were being sidelined.
Energy and Communications committee chairman James Rege accused the Treasury of guaranteeing the Kenya Broadcasting Corporation (KBC) a huge loan from the Japanese Government to buy Medium Wave (MW) radio broadcast equipment when the world was moving to Frequency Modulation (FM).
Obsolete equipment
The minister agreed that Japan may have dumped obsolete equipment on KBC but absolved the lender, saying the borrower is to blame.
“We are negotiating with the Japanese government with the aim of converting the debt to KBC so that the government can take up the loan. We don’t blame the lender, we blame the borrower,” said the minister.
Lari MP David Njuguna expressed concern over the growing public debt, stating that the country risks suffering the crisis of euro zone countries like Greece.
