The government remains committed to maintaining its presence in the international financial market by refinancing existing commercial maturities and mobilizing resources for budget support, National Treasury Principal Secretary Dr. Chris Kiptoo has said.
In a speech read on his behalf by Benard Gibet from the National Treasury’s Public Debt Management Office during a public participation forum in Eldoret, the PS explained that the medium-term debt strategy (MTDS), was prepared annually to help the government make informed decisions regarding public debt.
Dr. Kiptoo emphasized that the primary objective of the MTDS was to ensure that the government’s financial needs were met at the lowest possible cost while maintaining a prudent degree of risk.
“The MTDS serves as a guiding framework for our public debt portfolio, prioritizing cost minimization and risk management with the ultimate goal to ensure that our debt remains sustainable over the medium term,” he stated.
Dr. Kiptoo noted that the key focus of the MTDS was to diversify Kenya’s public debt structure by strengthening the domestic debt market. This move aims to reduce reliance on external borrowing and minimize exchange rate risks associated with foreign debt.
He further explained that the government plans to borrow 25 percent from external sources and 75 percent from domestic sources to meet funding needs at minimal cost and risk by mobilizing resources through the issuance of Treasury Bonds and Bills locally, while external borrowing will mainly come from concessional loans from multilateral and bilateral lenders, as well as limited commercial loans such as international bond issuances.
The public participation exercise was attended by more than 300 representatives from Uasin Gishu, Elgeyo Marakwet, Trans Nzoia, West Pokot, Narok and Nakuru counties.
“The forum provides an opportunity for citizens and stakeholders to engage with policymakers and contribute their perspectives to the MTDS, reinforcing transparency and accountability in public debt management,” said Dr. Kiptoo.
He reassured the public that their feedback would be taken into account before finalizing the MTDS, appreciating their participation and support in shaping policies that will drive Kenya’s infrastructure development and improve the lives of citizens.
While responding to a myriad of issues raised by the participants that included why the government keeps on borrowing, and how the money was spent, and why spending on government projects cost much more than what is budgeted, Gibet elaborated on how the government borrows to fund development projects clarifying that most loans were tied to specific projects, making it possible for the public to trace expenditure at the local level.
He also outlined the process of debt management, from loan acquisition and contract signing to debt repayment planning. This he said, includes budgeting for debt servicing in the medium term to ensure sustainability.
Douglas Manyara, also from the Public Debt Management Office, highlighted that due to the budget deficit, the government must borrow funds to finance priority projects.
However, he assured the public that borrowing decisions are carefully planned, taking into account future debt levels, revenue projections, and budgetary needs.
“The government aims to reduce Kenya’s debt from an average of 65 percent to at least 55 percent, which is the recommended legal threshold. This can be achieved by mobilizing more resources from the domestic market,” explained Manyara.
By Tuphosa Ng’ani and Kiptanui Cherono