The Public Debt and Privatization Committee has warned that the country is at the risk of being exposed to huge penalties. This comes after the Committee raised concerns over loans secured by the government and whose details remain unknown.
According to the report tabled in the National Assembly, 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.
Out of the 19 loans, only 3 commercial loans had been disbursed, representing the less than 11 percent. This means the projects would not have been completed by the time the period of repayment begins.
In addition, the committee 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 also appeared before the committee, raised concerns on the fact that some of the loans were taken in different currencies from that of the repayment which shot up the cost of the loans particularly due to the fluctuation of the exchange rate.
Following this, 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 recommended that loans should fund projects with high financial returns to ease the burden of repayment.
It was also revealed 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 pressured and likely to default on the loans.
