Treasury CS nominee John Mbadi vows to make debt records public yearly

Treasury Cabinet Secretary nominee John Mbadi has advocated for the annual publication of Kenya's debt records as a measure to manage and monitor the country's ballooning national debt, which stands at approximately Ksh.10.5 trillion.

Appearing before the National Assembly's Committee on Appointments for vetting on Saturday, Mbadi lamented that while Kenyans have an idea of the total public debt, they have not been privy to the specifics of the cash advances.

"If you listen to the discussion around debt, Kenyans seem to be asking what our actual level of debt is. Is it really Ksh.10.5 trillion? The answer could be Yes, but Kenyans want proof and evidence," he said.

"If Kenyans owe people money, why can't they know who they owe, how much they owe them and the level of interest for each loan?"

Mbadi made the remarks in response to a question posed by Deputy Speaker Gladys Boss, who asked him to explain how he would ensure sustainable debt management at the national exchequer, should his nomination be approved by the lower House.

According to the former Nominated MP, regular transparency about Kenya's national debt will ensure that the public fully understands and holds accountable those managing the country's finances.

"One of the things that we need to do is to make a debt register a statutory document which should be published every year like we publish all the other documents," said Mbadi.

"It is not the government that owes money to China, the World Bank or the IMF, it is Kenyan taxpayers, and you cannot owe money to someone without knowing how much you owe them."

Further, Mbadi suggested that Kenya should refrain from borrowing loans for general budgetary support and instead focus on using the cash advances to exclusively finance value-adding public projects that will help the country repay the loans.

"We must work on linking projects to loans. We cannot borrow loans for general budgetary support. From 2014, we shifted our borrowing strategy from specific donor-funding projects to general support," he noted.

"What this means is that debt comes to Kenya without going to specific projects. How then will we pay that loan if it does not fund value adding projects or investments in public assets?"

Mbadi likewise chimed in on how he intends to expand Kenya's tax base and revenue mobilisation in the aftermath of the withdrawal of Finance Bill 2024, which has left a huge gap in Kenya's operating budget for the fiscal year.

"The focus has been that we should be increasing tax rates and coming up with new taxes but I don't think that is the solution. The solution to revenue mobilisation should be targeting the tax collector, KRA," he said.

"The taxman is like a cow that we milk without feeding. We have a provision that two percent of our revenue should go towards building capacity of KRA but we don't do it."

He added that KRA's current system is inadequate and encourages tax leakages, which negatively impact the country's tax collection efforts.

"Look at the system that KRA is using at the moment, it needs re-engineering. If you listen to those involved in tax collection, especially custom duties, we are losing a lot through smuggling and counterfeit products because we don't have a fool-proof system that can help us manage some of these tax leakages."

Additionally, Mbadi poked holes into KRA's recent recruitment processes, calling out the taxman for allegedly hiring untrained personnel.

"There was a time KRA had a good policy of graduate recruitment and they were properly trained. You must have properly trained tax experts. The way we are recruiting staff at KRA and deploying them needs to be looked at," he said.

"You cannot have people who are not properly trained to collect taxes from people who hire properly trained accountants to collect their taxes. We also need to look at the leadership and management of KRA in general."