Economy

MPs probe ministries over Sh1.6bn charge for unutilised loans

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Parliament buildings in Nairobi. FILE PHOTO | NMG

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Summary

  • Parliament will probe all ministries, departments and agencies of government that failed to draw down loan balances forcing the Treasury to pay commitment fees worth Sh1.7 trillion.
  • The government paid Sh1,657,544,758 on ccommitment fees on loans not utilised but loan agreement had been signed-off as of June 30, 2021.

Parliament will probe all ministries, departments and agencies of government that failed to draw down loan balances forcing the Treasury to pay commitment fees worth Sh1.7 trillion.

The government paid Sh1,657,544,758 on ccommitment fees on loans not utilised but loan agreement had been signed-off as of June 30, 2021.

The National Assembly’s Finance and National Planning committee will investigate the use of borrowing to pay loan commitment fees.

A lender usually charges commitment fees to a borrower whom it has agreed to extend credit as a way of guaranteeing the lender that the borrower will take up the funds.

“The inefficiencies in drawing-down borrowings by the implementing government agencies have led to the loss of public funds and imprudent and irresponsible use of public money contrary to the principle of public finance in Article 201 (d) of the Constitution,” Garissa Township MP Aden Duale while seeking a statement from the Treasury.

The committee is required to investigate whether the National Treasury has technically exceeded the set debt ceiling of Sh9 trillion without seeking new approval from Parliament and whether Kenya's public debt is sustainable.