US, Kenya partner in Treasury staff hiring plan

Money Markets

The National Treasury building in Nairobi. PHOTO | FILE 

By GEOFFREY IRUNGU, girungu@ke.nationmedia.com

In Summary

• Deal to help timely remittance of debt repayments and build officials’ capacity

The National Treasury has partnered with its US counterpart to improve the management of public debt through recruit of more staff and quicker document processing.

An International Monetary Fund (IMF) report that the Kenyan Treasury is keen to increase the capacity of the Debt Management Office (DMO) with a view to preventing accumulation of foreign arrears as happened recently.

In the report, the IMF revealed that Kenya was late by a few days in payment of unspecified amount of loans, but this has now been cleared. A major reason for the accumulation was the slow processing of the repayments due to limited size of the staff.

“Efforts to strengthen the capacity of the Debt Management Office are ongoing. The authorities are taking steps to address staffing and enhance the risks and compliance functions of the office,” said the IMF in the report.

The Treasury is using the technical services of the US Treasury to strengthen capacity in terms of staffing, training, processes and systems of the DMO to manage debt, the IMF also reveals.

“A technical assistant from US Treasury is on the ground to help strengthen the capacity building process. A work plan has been finalised and is awaiting approval in order to commence implementation,” said the IMF.

Kenya has recently increased the amount of debt — with the largest increase coming from China — to the point where the total public debt stands at over Sh2.7 trillion.

Slightly over half of the debt is external, thereby increasing the risk of it rising with the current volatility in the exchange rate for the shilling against the dollar.

READ: Treasury’s dollar-denominated debt rises by Sh219bn

The new strategy by the Treasury also involves appointing a substantive holder of the position of director-general of the DMO. The IMF also reports that the process of recruiting the director for the debt management office has commenced.

Felister Kivisi has been acting as the director since the retirement of John Murugu some two years ago.

With regard to the arrears, the IMF said Kenyan authorities have restructured the way the debt repayment process is managed.

“The authorities have adopted a preemptive approach to process debt repayments. First, they have begun to rely on their reporting systems rather than on invoices from lenders. Second, the payment process will start 30 days before the due date, to allow for internal approvals by National Treasury and Controller of Budget and timely settlement by the CBK,” said the IMF report.

IMF’s Nairobi office resident representative Armando Morales said the amounts involved were not large, but that corrective action had been taken to prevent recurrence of the arrears in future.

The Kenyan authorities had asked the IMF board of executive directors to waive the condition for the repayment in approving the new precautionary loan of Sh65 billion ($610.7 million).