Treasury in Sh60.5bn firms’ loan guarantees

Auditor-General Edward Ouko at a past event. PHOTO | FILE 

By GEORGE OMONDI

The Treasury has soaked up a total of Sh60.5 billion in loan guarantees to State firms, exposing taxpayers to high risk of defaults.

The Treasury’s debt management strategy for 2017 indicates that Kenya Ports Authority accounts for 72 per cent or Sh43.5 billion of the outstanding State-guaranteed loans.

The partly private KenGen comes in second with Sh8.2 billion of the guaranteed debts followed by Kenya Railways at Sh4 billion.

The Treasury has also been grappling with Sh2.2 billion it guaranteed to the underperforming national broadcaster KBC, Sh1.44 billion to the troubled East African Portland Cement and Sh1.16 billion to Tana and Athi River Development Authority (Tarda).

The taxpayer is already shouldering the debt advanced to KBC and Tarda after cash flow challenges forced the two to skip debt payment the debts. According to the Treasury’s debt management strategy paper, the stock of non-performing guarantees hit Sh3.38 billion by June 2016.

The amount guaranteed to the six State agencies is in addition to the Sh343 billion that the International Monetary Fund (IMF) says has not been disclosed as power sector guarantees in the past 10 years.

“Information on active public private partnership (PPP) contracts worth up to $3.4 billion or 5.7 per cent of the GDP has not been made public or accounted for in official public finance documents, meaning that their fiscal implications are yet to be fully assessed,” the IMF said in its September report.

Auditor-general Edward Ouko has frequently queried the circumstances under which the Treasury continues to repay debts of State firms which have not been declared insolvent