Treasury to delegate more powers to debt office boss
Director General Public Debt Management Office National Treasury Haron Sirima. He is on his way out and the Public Service Commission (PSC) has initiated the recruitment of his replacement.
Contracting of new loans and the day-to-day management of debt will be an exclusive role of the Public Debt Management Office (PDMO), the National Treasury has disclosed, handing a boost to the office that has struggled for relevance.
As part of the plan to make the PDMO autonomous, the National Treasury has disclosed that policy changes will be made to give the debt office a stronger grip on the management of the country's debt.
The role of PDMO, which is domiciled at the National Treasury and headed by a Director General, has largely been advisory, with the office playing the role of maintaining the debt registry.
“The PFM (Public Finance Management) Act, 2012 seeks to establish PDMO within the National Treasury, but with some degree of independence or autonomy, regarding the management of the portfolio and of the office,” said the National Treasury in the 2024 medium-term debt management strategy.
“This will be achieved by developing a policy, financial and administrative framework (PFAF) within which the PDMO would operate, and delegating the operational decisions on borrowing and debt management and the day-to-day management of the Office from the Cabinet Secretary to the Head of the PDMO,” added the Treasury.
PDMO is headed by Haron Sirima, who is on his way out, and the Public Service Commission (PSC) has initiated recruitment of his replacement.
With the changes, the PDMO will have the power to approve or reject proposed loans, a major boost for the office for an office that has largely been drawing up reports on debt management and giving forecasts on expected borrowing.
Earlier, an official in PDMO had revealed to the Business Daily that PDMO is likely to enjoy autonomy like that of the Central Bank of Kenya (CBK).
This will be a build-up to an earlier proposal to give PDMO additional functions of advising parliament and the Cabinet Secretary for Treasury on the sustainable levels of public debt and the annual borrowing limit.
“Right now you can advise the CS against taking a certain loan but they are free to do what they want to do,” said an official at PDMO.
Kenya’s debt levels have since crossed the Sh11 trillion mark by the end of December last year owing to a weak shilling which inflated the size of the Kenyan debt.
Public debt management has become critical after the country’s loan obligations worsened, with the World Bank and International Monetary Fund raising Kenya's debt distress risks to high from moderate.
An independent PDMO, the source said, is likely to slow down the accumulation of debt and bring it down to an anchor of 55 percent of gross domestic product (GDP) in present value terms.
The present value of public debt was 68.2 percent of GDP against the approved debt anchor of 55 percent of debt to GDP.
