When Jubilee took over in 2013 the public debt ceiling was KShs 1.2 trillion which applied to external debt portion. This limit was in absolute terms.
In December 2014, the then Treasury CS Henry Rotich asked parliament to raise the ceiling to KShs 2.5 trillion.
“If we approve a lower figure, we’ll have to come back and ask for more. So we thought, why not have enough until 2017?” Mr Rotich said.
There was a heated debate on the issue in parliament as MPs argued that the then KSh 2.305 trillion total public debt was already quite high. The matter was put to a vote. 79 MPs voted “yes”, 42 voted “no” and one abstained.
After the ceiling was raised Treasury went on a borrowing spree which included syndicated loans and eurobond I.
In 2015, Treasury went back to parliament this time seeking a relative debt ceiling. Notice that in 2014 they had claimed the new debt ceiling would apply till 2017.
The law was ammended to read as follows;
Public Finance Management (National Government) Regulations, 2015
26. (1) In addition to the fiscal responsibility principles set out in section 15 of the Act, the following fiscal responsibility principles shall apply in the management of public finances—Fiscal responsibility principles.
(c) the national public debt shall not exceed 50 percent of gross Domestic Product (GDP) in net present value terms;
By passing this law the MPs denied themselves the powers to set public debt ceiling.
Treasury took advantage of this and borrowed KShs 1.6 trillion in just two years. Thus in two years Treasury borrowed an amount equal to the total borrowed over the 50 year period to 2013 since independence.
This reckless borrowing has continued to date when the public debt stands at KShs 5.9 trillion compared to KShs 1.9 trillion when Jubilee took over.
As queries rose about rising public debt Emgwen MP Alex Kosgey in 2018 proposed a Ksh.6 trillion national debt ceiling to cushion the country from the rising debt.
This has prompted Treasury to seek a new debt ceiling. The MPs passed Treasury’s request by acclamation and without debate on the issue. The amendment was as follows;
(a) in regulation 26(1), sub paragraph (c) by deleting the words “50 percent of Gross Domestic Product (GDP) in net present value terms” and substituting therefor the words “nine trillion shillings”; and, (b) in regulation 196, paragraph (1) by deleting the words “net present value of the total public debt that is” and substituting therefor the words “set limit”.
From the experience above we all know what will follow. The new debt ceiling limit will be exhausted in no time. Notice that the limit has no timelines.