Entry Instance

HTTP 200 OK
Allow: GET, PUT, PATCH, DELETE, HEAD, OPTIONS
Content-Type: application/json
Vary: Accept

{
    "id": 349892,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/349892/?format=api",
    "text_counter": 639,
    "type": "other",
    "speaker_name": "",
    "speaker_title": "",
    "speaker": null,
    "content": "THAT, pursuant to Section 50(2) of the Public Finance Management Act, 2012, this House approves the increase of total indebtedness for the time being outstanding in respect of principal amount of money borrowed or credit obtained from US$9.3billion (Kenya shillings eight hundred billion i.e. Kshs800billion) to US$14 billion (Kenya shillings one trillion two hundred billion i.e. Kshs1.200 billion). On 12th February 2009, pursuant to Section 6(1) of the External Loans and Credit Act, Cap.422 of the Laws of Kenya which is now repealed, this House approved the increase of total external indebtedness from Kshsh500 billion to Kshs800 billion. At the time of setting the ceiling, the Government’s external debt stood at US$6,181 equivalent to Kshs480 billion at the rate of Kshs78 to the US dollar which was prevailing at that time. Since that time, repayments have been effected and new loans have been contracted and as at November 2012 the total debt stood at US$9.056 million equivalent to Kshs771 billion made up as follows: Multilateral institutions – US$5,537 billion Bilateral creditors – US$2,657 billion Commercial banks and suppliers’ credit – Kshs862 million bringing the total debt to KshsUS$9 billion equivalent to Kshs771,383 million. Mr. Deputy Speaker, Sir, what this means is that the total debt is therefore very close to the ceiling of Kshs800 billion and the reason for this is partly due to the depreciation of the Kenya shilling against the major currencies which our debts are denominated. For instance, against the US dollar, the Kenya shilling depreciated by 10 per cent moving from Kshs78 in June 2009 to Kshs86 currently. It is therefore necessary to raise the ceiling to comply with the law. We also need to increase the ceiling to accommodate new programmes and project loans that we intend to borrow over the next five years of the medium term plan, that is from 2013 to 2017 and also under the second plan under Vision 2030. As part of the efforts to sustain the economic growth over this period and continued fight against poverty, we have through the Medium Term Fiscal Framework identified activities, programmes and projects that will need to be undertaken and funded. We need to borrow externally about Kshs350 billion over the next five years and we need this money to finance them Mr. Deputy Speaker, Sir, again let me say that our policy on external borrowing is to borrow as much as possible on concessional terms and I would like to inform the House that this policy has been maintained and will be maintained and I can also confirm that over 90 per cent of the projected external borrowing will be on concessionary terms. In reviewing the ceiling, we also need to consider the fact that our external debts had accumulated in all major world currencies but mostly in US dollars, Euros and Japanese Yen. Exchange rates between these currencies and the shilling fluctuate mostly upwards. To avoid the need to have to review the ceiling frequently on account of exchange rates alone, we are factoring the ceiling for giving an allowance of currency fluctuations. The term of this House will expire on 15th January in readiness for the general elections scheduled for 4th March 2013 after which the next Parliament will be reconvened. To enable Government to contract essential external loans some of which are at advanced stages of negotiations with our development partners, it is vital that this"
}