Business Daily
Central Bank of Kenya
Dr Thugge
Geoffrey Mwau
Institute of Economic Affairs
International Monetary Fund
John Mutua
Kamau Thugge

Treasury seeks experts to manage Sh5trn debt

The Treasury is recruiting a team of debt management experts in a move that signals rising concern over Kenya’s spiralling loans load that has exerted liquidity pressures on the economy.

Up to 20 experts are being hired in the recruitment drive intended to sharpen the government’s focus on management of costs and ability to raise and service new debt, the Treasury said in a notice inviting applications for the jobs.

“They will provide guidance in determining borrowing ceilings for national and county governments,” Treasury Principal Secretary Kamau Thugge says in the job descriptions seen by the Business Daily.

The officers will also be tasked with reviewing debt sustainability reporting formats, preparing proposals for debt restructuring as well as liaising with the Central Bank of Kenya (CBK) and other Treasury departments for “effective debt management”, according to the circular.

Kenya’s public debt crossed the Sh5 trillion mark for the first time in June this year, shining a light on Treasury mandarins and renewing the protracted debate on the country’s ability to carry the load in the long term.

Official statistics show that the latest acceleration of the debt pile was mainly attributable to external borrowing, which pushed total outstanding foreign debt to Sh2.563 trillion as at the end of February.

Domestic debt, which is more current having included May data, now stands at Sh2.448 trillion, making for a total Sh5.011 trillion. The Treasury has said that it intends to cut Kenya’s fiscal deficit to three per cent by 2022, and seven per cent of the GDP in the current financial year, down from 9.6 percent of GDP the fiscal year that ended June.

Dr Thugge says the resource mobilisation officers will advise the Treasury on borrowing ceilings, make recommendations for debt restructuring and carry out due diligence on new debt instruments.

The Treasury director-general of budget, fiscal and economic affairs, Geoffrey Mwau, said the planned hires are in line with the ministry’s ongoing plan to manage debt effectively.

The recruitment comes at a time Kenya is struggling to meet the International Monetary Fund’s (IMF) fiscal deficit conditions that are pegged on future availability of a Sh152 billion ($1.5 billion) balance of payment insurance facility.

“We now have the authority to recruit and strengthen the debt and resource mobilisation departments,” Dr Mwau said in an interview.

Chinese debt accounts for a large part of the build-up in bilateral debt — a large segment of which was taken to finance the standard gauge railway. Concern over Kenya’s debt load is mainly hinged on the fact that it has been rising at a rate that is way ahead of revenue growth, reducing the government’s capacity to pay.

“Kenya’s official policy has been to go for concessional loans, but we haven’t managed that very well in recent times,” said John Mutua, the programmes officer at the Institute of Economic Affairs.

Kenya has since last year come under increasing pressure to slow down its uptake of loans, but the warnings have so far gone unheeded.

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