Debt management experts hired to manage Kenya’s increasing Sh5 Trillion public debt

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Debt management experts hired to manage Kenya’s increasing Sh5 Trillion public debt.

The National Treasury & Planning in Kenya is hiring up to 20 debt management experts that are meant to help manage the increasing loans load that has brought liquidity stress on Kenya’s economy.

In a new notice inviting job application for the post, the Treasury said the debt management recruitment drive is anticipated to improve Kenya’s government focus on managing the costs and ability to raise and service new debt.

Treasury Principal Secretary Kamau Thugge on Kenya's debt management experts.

Treasury Principal Secretary Kamau Thugge on Kenya’s debt management experts.

“They will provide guidance in determining borrowing ceilings for national and county governments,” Treasury Principal Secretary Kamau Thugge said.

The Treasury is looking to fill various debt management positions, which include assistant director of debt management, principal debt management officers, chief management officers, assistant director for resource mobilisation, principal mobilisation officers and chief principal mobilisation officer.

The debt management experts’ job will be, reviewing debt sustainability reporting formats, preparing proposals for debt restructuring in addition to liaising with the Central Bank of Kenya (CBK) and other Treasury departments for effective debt management.

Kenya’s public debt rose passed the Sh5 trillion mark for the first time in June of 2018, exposing Treasury managers and firing the continuing debate on Kenya’s ability to carry the debt burden in future.

Official numbers show that the latest surge of the debt pile was mainly due to external borrowing, which pushed the overall outstanding foreign debt to Sh2.563 Trillion as of the end of February.

Kenya’s national debt now stands at a total Sh5.011 Trillion. The Treasury aims to cut Kenya’s fiscal deficit to three per cent by 2022, and seven per cent of the GDP in the current financial year, down from 9.6 percent of GDP the fiscal year that ended June.

Treasury Principal Secretary Kamau Thugge said, the resource mobilization of the debt management experts, will help advise the Treasury on borrowing ceilings, make recommendations for debt restructuring and carry out due diligence on new debt instruments.

“They will also review borrowing proposals, loan agreements and participate in loan negotiations,” the PS says.

Kenya is currently struggling to meet the International Monetary Fund’s (IMF) fiscal deficit conditions that are attached on future availability of a Sh152 Billion ($1.5 Billion) balance of payment insurance facility.

Kenya’s fast growing public debt in the recent years, signals an imminent increase in debt servicing obligations, including interest and principal payments, whose ultimate impact is to increase recurrent expenditure and a crush on development spending.

A huge concern over Kenya’s public debt is the fact that it has been rising way more than the revenue growth raising concern over the governements ability to repay its loans. Part of the huge raise in the Kenya’s debt is project like the Chinese standard gauge railway.

Economists have also warned that high levels of commercial borrowing means interest payment will soon become Kenya’s biggest test in public debt management.

“Kenya’s official policy has been to go for concessional loans, but we haven’t managed that very well in recent times,” said John Mutua, the programmes officer at the Institute of Economic Affairs.

Kenya has since last year come under increasing pressure to slow down its application of loans, but the warnings have so far gone unheeded.

“We advise government to work towards reducing debt,” Jan Mikkelsen, the IMF resident representative to Kenya, told Parliament in February, warning that the debt was approaching “unstainable levels”.

The Kenyan government has stayed rebellious following the warnings, arguing that the economy is large and robust enough to bear the debt load.

“I want to assure Kenyans that at no point has the country been at risk of default,” President Uhuru Kenyatta said in March 2017.

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