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{
    "id": 1222172,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1222172/?format=api",
    "text_counter": 240,
    "type": "speech",
    "speaker_name": "Bonchari, UPA",
    "speaker_title": "Hon. Charles Onchoke",
    "speaker": null,
    "content": " Thank you, Hon. Temporary Speaker. The report by the Standard and Poor (S&P) on Kenya's credit worthiness shows that Kenya is not doing well on a number of parameters like solvency and liquidity. What that means in terms of public debt is that the cost of borrowing for Kenya is going to be higher from whoever she will approach for debt. Looking at the accuracy of our numbers, I have some questions. The definition of public debt by IMF's Debt Sustainability Analysis includes the Central Government debts, corporations and guarantees. That is also repeated in the Constitution of Kenya. However, a number of other debts are excluded such as the social security debts and the pensions provident funds. They must be paid when time is due. People contributed these funds and yet they do not form part of the public debt. The pending bills are hardly included in this formulation. We know that counties get their funds from the Government of Kenya. Counties that owe money to, for example, vendors and suppliers pay off those debts whenever they get their allocation. That means that if a county defaults, the Government must pay. Therefore, those debts must be part of the total sum of public debt but they are excluded. Looking at the proposals recommended in this Report, one of them is that we adopt the 50:50 ratio of external and domestic debt so that we reduce borrowing from the domestic market and borrow from outside. At the same time, we are told that with 72:28 ratio, there is a big problem. We are not able to absorb the Ksh1.179 trillion. We are paying commitment fees and we are not using these resources. What I would love to see is a strategy on how to deal with the poor absorption rate. If they are going to increase our external borrowing yet our absorption rate is low, they will not be solving the problem. Therefore, we need to have a strategy and find a way of dealing with the poor absorption rate by our agencies and ministries that are implementing the programmes upon which the borrowings were made. There is a proposal regarding hedging mechanism for foreign exchange risks. This is a mechanism used by the private sector. Governments hardly use it. This is, for the most part, unchartered waters. It must be used cautiously so that we do not find ourselves with scandals like we saw in the past, for example, the Goldenberg scandal. Therefore, I expect more work to be done so that the Government does not find itself in higher obligations of public debt. Besides the proposal that we should go 50:50, I would like to understand what studies were made to make it 50:50 and not 40:60. Why is 50:50 the right ratio to go with? The non-performing loans which have been a problem for many years still continue to haunt us. They are here with us and they still form part of the public debt. We have many corporations that have been performing poorly. They have borrowed over the years and Government has guaranteed their borrowing. Their debts are due for repayment. Legally, the Government is obliged to pay those debts. For the longest time we have had many taskforces created to look at the problems afflicting these corporations so that we find a lasting situation. However, what we are seeing is an increase of such corporations instead of restructuring them. We should find out the ones that are performing. For the ones that have performed their mandates and are no longer relevant, we should get them out of our books and keep the ones we need. So, there is need to carry out a detailed study so that corporations that we need are not just employment bureaus for purposes of rewarding certain quarters. There is a proposal that we borrow concessional loans to pay obligations that have matured. Remember that our credit worthiness has been downgraded and we are looking at the possibility of accessing concessional loans. That will be a very difficult route to go. Therefore, The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}