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{
"id": 1222130,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1222130/?format=api",
"text_counter": 198,
"type": "speech",
"speaker_name": "Kitui Central, WDM",
"speaker_title": "Hon. (Dr) Makali Mulu",
"speaker": null,
"content": "So, these are internal inconsistencies which are in the document, which we are saying as a House that we must take note of and deliberate on. We must also make resolutions on them so that, as we move to the future, we are able to take care of public debt that will not end up punishing our future generations. The other issue which has been picked by my Chair - and I want to unpack - is what we call ‘sensitivity analysis’. When you look at this document, there are assumptions which have been given that the economy will grow by 6.1 per cent, the revenue collection will be at this level, the expenditure will be at that level, while inflation will be at this level. What happens if none of those assumptions hold? If none of them holds, then there is need to do a sensitivity analysis so that different scenarios are presented to Parliament so that we are prepared. “Just in case it works, this will be the option and, in case this does not work, this will be the next option.” When we looked at this document as a Committee on behalf of this House, there are things which are worth noting and there are others which, as we move on to the future, we must take seriously as a country. The other issue which is very critical is what we are calling the borrowing options. When you look at this document, it says the best option is to have 50 per cent domestic borrowing and 50 per cent external borrowing. That is now the medium-term debt management strategy. However, when you look at the policy document, the budget policy statement which also comes from Treasury, a document which is presented the same day with this other document, the policy is saying that borrowing will be at 72 per cent domestic and 28 per cent external. So, we are asking ourselves: “Which Government is talking?” We have two documents from Treasury saying two different things. As a House, what do we go with? That is what we are saying. This House is being advised by this Committee after looking at the options. The best of the options, which is being suggested in the Medium-Term Debt Management Strategy, is the option of 50 per cent domestic borrowing and the option of 50 per cent external borrowing. We are also saying that if that is not the option which is going to be adopted by the Treasury, then there will be need for the Treasury to come back to the House so that we review the situation and advise on the way forward so that before we approve, we are on the same page. Why are we insisting on balancing of 50:50? If you look at the interest rate repayments, you will realise that out of the total amount paid out as interest, 75 per cent of that total amount is for domestic borrowing and 25 per cent is for external borrowing. Meaning, borrowing domestically is an expensive exercise and, at the same time, borrowing domestically leads to what we call crowding out of the public sector. What Kenyans should know is that it is easier for the Government to borrow from outside there compared to a private business person who cannot borrow from outside Kenya. So, what we are saying is that it is important we allow more domestic borrowing by our private sector and allow the Government to borrow from out there. The second advantage is the interest rates. The interest rates are lower when you borrow from bilateral institutions like World Bank, International Monetary Fund, multinational institutions or other countries. The whole issue of concessional borrowing is easier realised out there than when you borrow domestically. Our proposal is to get that, so that we have 50:50 per cent."
}