Treasury on the spot over 19 'mysterious' loans amounting to Ksh.213 billion

The Public Debt and Privatisation Committee has raised a red flag over loans secured by the government and whose details remain unknown, warning that they risk exposing the country to huge penalties.

The report tabled in the National Assembly revealed that between May last year and April this year, Kenya procured 19 externally financed loans from international creditors amounting to Ksh.213.24 billion, of which less than 11 percent had been disbursed.

The committee, in its report, noted that six loans were taken between May and August last year amounting to Ksh.105.06 billion; 8 loans valued at Ksh.43.38 billion taken between September and December last year; while additional 5 loans valued at Ksh.64.8 billion were procured between January and April this year.

What was however alarming was that of the 19 loans, only 3 commercial loans had been disbursed, representing less than 11 percent; meaning the intended projects may not be realized by the time the period of repayment begins yet their completion may have helped to raise the resources needed to service the loans hence minimising pressure on the exchequer.

And with no information on loans taken on behalf of government entities for social impact programmes, the committee warned of a liability exposure.

As at June last year, the Controller of Budget flagged Ksh.218.8 billion worth of non-performing loans; the number is expected to have risen.

The committee further found that some of the loans contained clauses that hid the actual cost of the loans and that there was little information of the specific projects the loans were financing.

The Controller of Budget, who appeared before the committee, further raised issue with the fact that some of the loans were taken in different currencies from that of repayment which shot up the cost of the loans particularly due to the fluctuation in the exchange rate.

To facilitate an audit of Kenya's debt to ascertain if there was value for money, the committee recommended that the National Treasury digitize the loan approval and monitoring system to enhance transparency and accountability and that Treasury should submit to the National Assembly full details on the list of projects the loan will be financing, the creditors and the loan terms.

They also proposed that loans should fund projects with high financial returns to ease the burden of repayment, this amid a revelation that most of the new loans they had flagged will be maturing in 2027, an election year and also a time when there will be repayment of older loans meaning the government will be over-pressured and likely to default on the loans.