Summary
- The National Assembly’s Budget and Appropriations Committee (BAC) has mooted a plan to convert the bills into bonds to ease cash flow constraints facing the National Treasury.
- MPs instructed the Treasury to come up with debt swaps for loans of more than Sh500 million the bulk of which are held by the national government.
Suppliers anxious to get paid after the government started
settling pending bills may have to wait longer following a proposal to
convert their dues into long-term State debt.
The
National Assembly’s Budget and Appropriations Committee (BAC) has mooted
a plan to convert the bills into bonds to ease cash flow constraints
facing the National Treasury.
MPs instructed the
Treasury to come up with debt swaps for loans of more than Sh500 million
the bulk of which are held by the national government.
This
will offer a huge relief to the Treasury, reducing the amounts needed
to settle the debts and stretching the time it will take to make
payments.
While suppliers may not get all their cash at
once, they will have assets that are tradable and will earn interest on
the instruments over time.
"The committee recommends that pending bills that have been
established as legally payable and above Sh500 million be settled
through a long-term instrument including establishment, where necessary,
of debt swaps for intergovernmental bills," said Kimani Ichung’wah, who
chairs BAC, in a report on the scrutiny of the Budget Policy Statement
(BPS) for financial year 2020/21.
The government has
been unable to clear pending bills worth Sh88.9 billion and has been
buying time by disputing some of them while paying off a portion.
A
special audit by the Auditor-General only approved Sh51 billion for
payment and as of January 8, the government only paid Sh30.3 billion
meaning Sh20.9 billion cleared bills are still outstanding.
Those
disputed over insufficient documentation to support services rendered
or work done may still be cleared pilling the pressure on overdue
payments.
According to the International Monetary Fund
report on Kenya’s fiscal state, the State Department of Infrastructure,
was holding a further Sh78 billion by June 2019.
To
deal with this, the government last year approved a controversial law
allowing the Kenya Roads Board borrow up to Sh360 billion for road
repairs and maintenance that will not appear in the debt register.
It
gave the State agency, which manages road maintenance levy and transit
tolls, power to issue a roads bond backed by taxes on fuel imports and
annual budget for roads.
President Uhuru Kenyatta said
government would float a Sh150 billion roads bond for the completion of
all ongoing road and infrastructure projects including paying pending
bills.
Public Debt Management Office Director-General Harun Sirima, however, said this would have to be approved before it is procured.
“Borrowing
from the roads board is purely public borrowing. They will have to
raise it through Treasury but as to whether we will approve that is a
different thing,” he said.
No comments :
Post a Comment