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{
"id": 1393781,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1393781/?format=api",
"text_counter": 211,
"type": "speech",
"speaker_name": "Sen. Veronica Maina",
"speaker_title": "The Temporary Speaker",
"speaker": null,
"content": " Thank you, Senator. Next Order, Sen. Faki?"
},
{
"id": 1393782,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1393782/?format=api",
"text_counter": 212,
"type": "speech",
"speaker_name": "Sen. Veronica Maina",
"speaker_title": "The Temporary Speaker",
"speaker": null,
"content": "The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Director, Hansard and AudioServices, Senate."
},
{
"id": 1393783,
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"text_counter": 213,
"type": "heading",
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"speaker": null,
"content": "MOTION"
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{
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"content": "ADOPTION OF REPORT ON THE MEDIUM-TERM DEBT MANAGEMENT STRATEGY, 2024"
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{
"id": 1393785,
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"type": "speech",
"speaker_name": "Sen. Faki",
"speaker_title": "",
"speaker": {
"id": 13211,
"legal_name": "Mohamed Faki Mwinyihaji",
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"content": "Madam Temporary Speaker, I beg to move that, the Senate- Adopts the Report of the Standing Committee on Finance and Budget on the 2024 Medium Term Debt Management Strategy, laid on the Table of the Senate on Thursday, 7th March, 2024. The 2024 Medium Term Debt Management Strategy (MTDS) was submitted to Parliament by the National Treasury and Economic Planning on 15th February, 2024 pursuant to Section 33 of the Public Finance Management (PFM) Act, Cap 412A. The Act provides that: “On or before the 15th February in each year, the Cabinet Secretary shall submit to Parliament a statement setting out the debt management strategy of the National Government over the medium term with respect to its actual liability and potential liability in respect of loans and guarantees and its plans for dealing with those liabilities.” Madam Temporary Speaker, upon submission, the 2024 MTDS was tabled in the Senate at the sitting held on 15th February, 2024. Thereafter, it was referred to the Standing Committee on Finance and Budget for consideration, facilitation of public participation and consequent tabling of a report in the Senate. Section 33(2) of the PFM Act provides that the MTDS should be aligned to the broad strategic priorities and policy goals set out in the Budget Policy Statement (BPS), which the Senate approved last week. Section 33(3) of the same Act provides that: “The Cabinet Secretary shall include in the statement the following information- a) the total stock of debt as at the date of the statement; b) the sources of loans made to the national government and the nature of guarantees given by the national government; c) the principal risks associated with those loans and guarantees; d) the assumptions underlying the debt management strategy; and e) an analysis of the sustainability of the amount of debt, both actual and potential.” The 2024 MTDS outlines the strategies and initiatives to be implemented with the goal of minimizing debt management costs and risks, and it covers the period from Financial Year 2024/25 to 2026/27. Madam Temporary Speaker, at the end of June, 2023, the nominal amount of public and publicly guaranteed debt was Kshs10.278 trillion, or 70.8 percent of the Gross Domestic Product (GDP). This comprised an external debt stock of Kshs5.446 trillion and domestic debt stock of Kshs4.832 trillion. According to the National Treasury, the total nominal stock of public and publicly guaranteed debt as at February 2024 was Kshs11.248 trillion, or 69.7 percent of GDP. Present value of public debt to GDP is 67.2 percent. This comprises external debt stock of Kshs.6.1899 trillion and domestic debt stock of Kshs.5.0580 trillion. The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Director, Hansard and AudioServices, Senate."
},
{
"id": 1393786,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1393786/?format=api",
"text_counter": 216,
"type": "speech",
"speaker_name": "Sen. Faki",
"speaker_title": "",
"speaker": {
"id": 13211,
"legal_name": "Mohamed Faki Mwinyihaji",
"slug": "mohamed-faki-mwinyihaji-2"
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"content": "The National Treasury committed to bringing down the Present Value (PV) of debt as a percentage of GDP from 67.2 - 55 percent over a period of five years in accordance with the requirements of Section 50 of the PFM Act. The foreign public debt is composed of multilateral, bilateral and commercial creditors categorised as follows: - a) Kshs3.118 trillion as multilateral debts, accounting for 50 percent of total external debt; b) Kshs1.399 trillion bilateral debts at 23 percent; and, c) Kshs1.671 trillion commercial debts at 27 percent of which Eurobonds account for Kshs.1.141 trillion or 18 percent. Domestic debt mainly comprises Treasury bonds and bills- a) Kshs4.272 trillion in Treasury Bonds, accounting for 85 percent of total domestic debt; b) Kshs565.63 billion Treasury Bills accounting for 11 percent; and, c) Kshs220.16 billion, or 4 percent as others (Overdrafts from Central Bank of Kenya, IMF Special Drawing Rights (SDR) and Allocation and Bank advances. As at the end of June, 2023, the Government guaranteed debt to the Kenya Power and Lightning Company (KPLC), Kenya Ports Authority (KPA), Kenya Electricity Generation (KenGen) and Kenya Airways (KQ) amounted to Kshs170.2 billion. The called-up guarantee loan of Kshs88.2 billion relates to KQ guaranteed debt. Madam Temporary Speaker, the fiscal deficit for Financial Year 2024/2025 approved under 2024 BPS is Kshs703.9 billion. This might come down as a result of the strengthening of the Kenya Shilling. The Medium-Term Debt Management Strategy (MTDS) proposes that this deficit will be funded by both foreign and domestic borrowing. The net foreign financing will be Kshs362.12 billion while domestic financing will be Kshs377.75 billion. In terms of optimal borrowing approach or strategy, the MTDS seeks to minimize costs and refinancing risks in the debt portfolio by maximizing access to external concessional borrowing. Over the medium term, the optimal borrowing strategy assumes a mix of 45 percent domestic and 55 percent external financing. The National Treasury submitted that that the total Debt Sustainability Analysis (DSA) conducted in December, 2023, indicates that Kenya’s public debt remains sustainable, although there is a high risk of debt distress. It is anticipated that the PV of debt to GDP ratio would remain above the approved threshold, at 55 percent, until 2029 (Financial Year 2028/29). This is expected to decline gradually to 48.1 percent in 2033 as a result of fiscal consolidation. Madam Temporary Speaker, further scrutiny of the External Debt Sustainability Analysis indicates that- (1) Throughout the forecast period, the PV of Public and Publicly Guaranteed (PPG) external debt to GDP ratio remains below the 40 percent threshold. (2) The PV of PPG external debt to exports (solvency indicator) remains above the 180 percent threshold through 2029. The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Director, Hansard and AudioServices, Senate."
},
{
"id": 1393787,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1393787/?format=api",
"text_counter": 217,
"type": "speech",
"speaker_name": "Sen. Faki",
"speaker_title": "",
"speaker": {
"id": 13211,
"legal_name": "Mohamed Faki Mwinyihaji",
"slug": "mohamed-faki-mwinyihaji-2"
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"content": "(3) The debt service to exports (liquidity indicator) surpasses its 15 per cent threshold due to repayment of Eurobonds in 2024 and 2028, as well as the rollover of external bank loans in 2025 and 2026. (4) The breaches in the debt thresholds in terms of exports indicate increased vulnerability of public debt to export and financing shocks. It is clear from the cost and risks analysis of the current public debt portfolio that- (1) Depreciation of Kenya shilling against major currencies increased the nominal debt to Gross Domestic Product (GDP) ratio to 70.8 per cent in June 2023 from 67 per cent in December, 2022. (2) The total interest payments as a share of GDP increased to 5.5 per cent as at June, 2023 from 5.3 per cent as at end of December, 2022. (3) The weighted average interest rate of external debt increased to 4.5 per cent in June 2023 compared to 3.9 per cent in December 2022. (4) Average Time to Maturity of the total portfolio declined from 8.8 years in December 2022 to 8.5 years in June 2023. (5) The projected debt redemption profile is characterized by large maturities in 2028, 2029, and 2030 on account of Eurobond and bank syndicated debts. Madam Temporary Speaker, noteworthy, findings made by the Committee include- (1) The stock of public and publicly guaranteed debt is Kshs11.248 trillion; comprising of domestic debt of Kshs5.058 trillion (45 per cent) and external debt of Kshs6.89 trillion (55 per cent). This is an increase of Kshs970 billion from Kshs10.278 trillion by the end of FY 2022/23 and is attributed to exchange rate movements and additional borrowing, among other factors. (2) The present value (PV) of debt to GDP stands at 67.2 per cent against the recommended benchmark of 55 per cent as provided in section 50 of the Public Finance Management (PFM) Act, 2012. Whereas this is a breach against the benchmark, the National Treasury projects that the present value of debt will be aligned with the benchmark by Financial Year 2028/29 through a defined fiscal consolidation path. This, however, requires regular reporting to Parliament to enhance continuous oversight and ensure compliance. (3) Although the debt-carrying capacity declined from strong in 2021 to medium as at December 2023 and the National Treasury indicates that the overall debt levels remain sustainable. The risk of debt distress is high due to global shocks that can potentially exacerbate macroeconomic vulnerabilities and subdue economic performance. (4) The recent liquidity management measures undertaken in February 2024 involving partial buy-back (USD 1.5 billion) of the USD 2 billion Euro bond maturing in June 2024, addressed the settlement risk associated with the Bond and has consequently influenced key macro variables such exchange rate dynamics and investor sentiments. (5) The proposed fiscal deficit for FY 2024/2025 of Kshs703.9 billion is to be financed through net foreign financing (55 per cent) and net domestic financing (45 per cent). Despite the National Treasury indication that the National Government will favour concessional borrowing, there is a proposed commercial borrowing in FY 2024/25 of The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Director, Hansard and AudioServices, Senate."
},
{
"id": 1393788,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1393788/?format=api",
"text_counter": 218,
"type": "speech",
"speaker_name": "Sen. Faki",
"speaker_title": "",
"speaker": {
"id": 13211,
"legal_name": "Mohamed Faki Mwinyihaji",
"slug": "mohamed-faki-mwinyihaji-2"
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"content": "Kshs151.00 billion which has the potential of worsening the debt position as commercial loans have higher interest rates. The Committee recommends- (1) THAT, consistent with the financing requirements underpinned in the 2024 BPS, the proposed fiscal deficit target of Kshs703.9 billion (3.9 per cent of GDP) for FY 2024/25 be approved. This is broadly in line with the proposed fiscal consolidation path, progressing to 3.1 per cent of GDP by Financial Year 2027/28. (2) THAT, the proposed borrowing strategy in the 2024 Medium-Term Debt Management Strategy (MTDMS) of 55 per cent for net external borrowing and 45 per cent for net domestic borrowing be approved for FY 2024/25 and the medium term. (3) THAT, going forward, the National Treasury should in subsequent budget cycles, ensure that the MTDS submitted to Parliament for consideration and approval contains the most recent data on the stock of public and publicly guaranteed debt as at the date of the statement in line with section 33(3) of the PFM Act, Cap.412A. (4) THAT, to enhance monitoring and transparency on in-year borrowing operations, at the end of every quarter of the financial year, the National Treasury should submit to the Senate a status report on any deviation from the approved borrowing strategy indicating the reasons for the deviation. (5) THAT, pursuant to section 50 of the PFM Act, Cap.412A, the National Treasury should submit a report to the Senate by end of 30th April, 2024, on the specific measures being taken to ensure that the National Government complies with the 55 per cent debt threshold within the timelines provided in the Act. Finally, I wish to thank the stakeholders who submitted written memoranda and who appeared before the Committee to present their comments on the 2024 MTDS. I thank the Offices of the Speaker and the Clerk of the Senate for the support extended to the Committee in undertaking this important assignment. I also take this opportunity to commend the Members of the Committee for their devotion and commitment to duty, which made the consideration of the 2024 MTDS successful. Lastly, I request Senators to approve the Report of the Committee on 2024 MTDS. I request Sen. Cheruiyot to second."
},
{
"id": 1393789,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1393789/?format=api",
"text_counter": 219,
"type": "speech",
"speaker_name": "Sen. Cheruiyot",
"speaker_title": "The Senate Majority Leader",
"speaker": {
"id": 13165,
"legal_name": "Aaron Kipkirui Cheruiyot",
"slug": "aaron-cheruiyot"
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"content": " Thank you, Madam Temporary Speaker. I rise to second this Motion brought to us by our Members of the Finance and Budget Committee, a report on the MTDMS. It is very important policy document, which unfortunately we mostly do not give it the due consideration. The biggest crisis that the country continues to face - and we have been in this space, fiscally speaking, for close to five years now - is a debt distress issue. Many of our policy decisions right now are being informed one way or the other by the debt situation we find ourselves in as a country. That is why, in its wisdom, Parliament made it mandatory for the Cabinet Secretary for National Treasury and Economic Planning to send this document to Parliament by the 15th of every financial year so to provide a guide and a way through which Parliament can appraise itself of our debt obligations and plan specifically of how we intend to unclog us out of this mess that we find ourselves in. The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Director, Hansard and AudioServices, Senate."
},
{
"id": 1393790,
"url": "http://info.mzalendo.com/api/v0.1/hansard/entries/1393790/?format=api",
"text_counter": 220,
"type": "speech",
"speaker_name": "Sen. Cheruiyot",
"speaker_title": "The Senate Majority Leader",
"speaker": {
"id": 13165,
"legal_name": "Aaron Kipkirui Cheruiyot",
"slug": "aaron-cheruiyot"
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"content": "I have observed many times on the Floor of this House that this is a conversation which we will have for the next foreseeable future. In my estimation, it is going to be longer than the five years we projected when we passed the PFM amendments a few months ago where we determined that the debt-to-GDP ratio needs to be at a sustainable level of 55 per cent of our GDP. That becomes the measure through which our debt sustainability is anchored. We gave ourselves five years. Of course, this financial year to 2029 with a view to making it possible that by 2029, the debt to GDP ratio will be at 55 per cent. Right now, it is at 68 per cent. So, 13 percent is no mean feat. If we carry on in the direction that I see this Report proposing, unfortunately, the bad news that we need to deliver to the country is that we will not be able to turn this wheel around by 2029. The proposals that we are making in this Report are sound and informed by good logic. I congratulate our colleagues who serve in the Committee on Budget and Finance for being thorough with this document. They have done an excellent job though I believe that there are more stringent measures that we need to introduce. The Executive cannot save the country because they are under pressure, and I understand where they are coming from. When they visit different parts of the country, speaker after the other, request for this or that other road, water project, hospital to be furnished and so on. I want to make mention of this because I appreciate what Sen. Faki has done a good job in elaborating all the recommendations that have been made by the Committee. However, in seconding, because I do not intend to be long, I wish to propose ways in which I think we, as a country, need to move and make it better. Madam Temporary Speaker, I have said this to the National Assembly and its leadership, I have told the President and I can even go publicly about this - I hold the view that so long as we do not do a zero-based budget and continue to do a programme- based budgeting process, we will be in this debt distress situation for many years to come. There are many areas that we continue to spend public funds, which we do not have to. Yesterday I was glad when I listened to the President speaking and mentioned something that I have been very passionate about, that there are many State corporations which we do not need to be funding. This is because some of them are obsolete, yet they continue to consume our taxes and we continue to borrow to keep them sustainable. It is inconceivable for a country with a small economy such as Kenya, that we spend over Kshs50 billion monthly just to run the operations of the Government. What is it that we are doing with over Kshs50 billion just to keep the Government afloat and running? Paying operations here and there; per diems for people. We do not need 350 State corporations. I believe that number can be reduced to even less than 100. If we gave more responsibilities to many of our State corporations and allowed them to do many other things other than ensuring that each of them has a Board, a Chief Executive Officer and a Company Secretary; all being paid by the taxpayers. Kenyans over overburdened. The electronic version of the Senate Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Director, Hansard and AudioServices, Senate."
}
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}