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{
    "id": 1393786,
    "url": "https://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"
    },
    "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."
}