Treasury On The Spot Over 19 “Mysterious Loans” Of Up To 213 Billion
The government-backed loans, whose specifics are undisclosed, have drawn the ire of the Public Debt and Privatization Committee, which has warned that they run the risk of subjecting the nation to severe fines.
According to the report presented to the National Assembly, Kenya obtained 19 externally financed loans totaling Ksh. 213.24 billion from international creditors between May of last year and April of this year, of which less than 11 percent had been released.
Mysterious loans
In its report, the committee noted that six loans totaling Ksh. 105.06 billion were obtained between May and August of last year; eight loans totaling Ksh. 43.38 billion were obtained between September and December of last year; and five additional loans totaling Ksh. 64.8 billion were obtained between January and April of this year.
Although the intended projects might not be realized by the time the period of repayment begins, their completion may have helped to raise the resources needed to service the loans, thereby reducing pressure on the exchequer. What was alarming was that only 3 commercial loans, or less than 11%, had been disbursed of the 19 total loans.
Additionally, there is no information available about loans made on behalf of government bodies for social impact programs.
The Controller of Budget identified non-performing loans of Ksh. 218.8 billion as of June last year; it is anticipated that this sum has increased.
The committee also discovered that several of the loans had provisions that concealed their true cost and that there was little knowledge of the precise projects they were backing.
The Controller of Budget, who spoke before the committee, also questioned why some loans were made in different currencies from those that would be used for repayment, which drove up the cost of the loans in part because of exchange rate fluctuations.
The committee recommended that the National Treasury digitize the loan approval and monitoring system to increase transparency and accountability and that Treasury should submit full information to the National Assembly on the list of projects the loan will be financing, the creditors, and the loan terms in order to facilitate an audit of Kenya’s debt to determine if there was value for money.
The majority of the new loans they had flagged will mature in 2027, an election year and also a time when there will be repayment of older loans, meaning the government will be under pressure and likely to default on the loans. They also suggested that loans should fund projects with high financial returns to ease the burden of repayment.
Mysterious Loans.
