The Institute of Economic Affairs (IEA) has raised an issue with the amendment of Section 6 (b) that seeks to delete section 31 (6) of the PFM Act for the Cabinet Secretary for Finance to charge debt costs to any other fund apart from the Consolidated Fund.
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Replies
The Public Debt and Privatization Committee led by its Vice-Chairperson Hon. (Dr.) Makali Mulu is currently receiving submissions from different stakeholders in regards to the Public Finance Management (Amendment) Bill, 2023.
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The PFM Amendment Bill was published on 4th May 2023 and read for the first time on 6th June 2023; and thereafter referred to the Public Debt and Privatization Committee for consideration subject to National Assembly Standing Order 207A and for reporting to the House.
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It also seeks to amend PFM Act No. 18 of 2012, by adjusting the framework for monitoring public debt and borrowing, and to align the Act with the provisions of the Constitution relating to definition of public debt, financial obligations and amend the debt limit.
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Further, the Amendment Bill seeks to provide provisions for the Cabinet Secretary in charge of the National Treasury to provide an explanation to Parliament, incase public debt exceeds the debt threshold.
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The institute for Social Accountability (TISA) under the Okoa Uchumi Campaign have presented their memoranda on the PFM (Amendment) Bill, 2023, where they have expressed their reservations on the proposed deletion of the word ‘public’ in the words ‘county public debt’.
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They argue that the use of ‘public’ is important in ensuring that governments retain fidelity to members of the public on whose behalf they acquire and appropriate debt. Both levels of government must retain consistent language of public debt, whether at National or County level.
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IEA argues that this clause would provide discretion and authority to the Cabinet Secretary to exceed powers intended by the article 214 (1) of the Constitution. The CoK does not contemplate that directions for charging debt to a separate fund would be enabled by regulations.
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The Institute of Certified Public Accountants of Kenya (ICPAK) while presenting their memoranda raised concerns on the exponential growth in total public debt, proposing a consideration by the Government to move away from commercial loans…
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…and to consider public-private partnerships as a form of financing development expenditure.
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ICPAK however supported the provision to amend Section 15 of the PFM Act stating that the elevation of the Public Debt Management Office to advise on sustainable debt levels will help provide well researched data for proper public debt management.
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Mr. Jimi Wanjigi presented his proposals for the rejection of the PFM (Amendment) Bill, 2023, in totality, and his findings on a forensic report on public debt; indicating tax revenue versus recurrent expenditure, based on statistics running from FY 2014/15 to FY 2022/23.
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In addition, Mr. Wanjigi provided suggestions of public debt reform measures that the government could undertake to lessen the cost of public debt servicing expenditures through rescheduling debt repayment…
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…adoption of a debt distress economy as has been done by Ghana and also by conducting a forensic audit of Kenya’s stock of public debt.
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