Parliament is embroiled in an ongoing saga of hiring secret public debt bosses

Amid the secrecy of the hiring process that began in January, the National Assembly has directed the Treasury to appoint a new Director General of the Public Debt Management Unit within 60 days.

The Treasury and Public Service Commission (PSC), which oversees the hiring of civil servants, has been protected for the post that technically fell vacant after Haron Sirima’s ouster was announced in January.
Dr Sirima was in charge since 2018.

The office is critical in dealing with Kenya’s public debt, including overseeing the servicing of debts, which have become increasingly risky for the country.

The PSC advertised the post in late January, but did not make public the list of jobseekers, shortlisted candidates and interview dates.

The Parliamentary Committee on Public Debt and Privatization directed the Treasury to fill the post within 60 days from June 4 — August 4.

“That, subject to section 64 (1) of the PFM Act, 2012, the National Treasury shall, within sixty (60) days, appoint the Head of the Public Debt Management Office as the Accounting Officer. Office for the Management of Public Debt Servicing Expenditure,” committee chairman Abdi Shuri told parliament in a report he tabled in the House on June 4.

PSC has traditionally published the names of candidates interested in the top jobs, shortlisted and interview dates.

This information did not emerge in the appointment of the head of Kenya’s Public Debt Management Office.

Interviews for candidates were conducted on Tuesday (June 18) where six candidates were shortlisted and one was selected, Treasury PS Chris Kipdu said.

“We did the interview for the new DG yesterday (Tuesday June 18) and we have one candidate. Please wait for PSC to communicate formally,” said Dr Kiptoo. “The Public Service Commission (PSC) is responsible for the recruitment of DG Public Debt Management Office. The Commission advertised the post, selected and interviewed the candidates. National Treasury is awaiting the result of PSC.

Dr Sirima’s exit was announced at a time when Kenya was grappling with severe liquidity challenges caused by uncertainty over its ability to access financing from financial markets ahead of a $2 billion Eurobond maturing in June this year.

In mid-February, Kenya sold a new $1.5 billion Eurobond at huge cost to fund the buyback of most of a $2 billion bond maturing this week.

The country was on the radar of investors because they feared it would not be able to make repayments due to its strained public finances.

A debt-fueled infrastructure drive is why Kenya’s debt-to-GDP ratio is now over 70 percent.
Credit rating agency Fitch estimates the country will spend nearly a third of its government revenue on interest payments this year, leaving little money for program spending.

Kenya’s public debt stands at Sh10.54 trillion as of April 2024, comprising Sh5.2 trillion and Sh5.3 trillion of external and domestic debt respectively.

Interest payments on public debt are estimated to exceed Sh1 trillion in the 2024/2025 financial year.
Kenya took out the first $2.75 billion Eurobond in two tranches – a 10-year paper at an interest rate of 6.78 percent and a five-year paper at 5.87 percent.

The five-year issue was partially repaid using the proceeds of another $2.1 billion Eurobond issued in May 2019.

Debt fell from Sh11.4 trillion to Sh598 billion due to the appreciation of the Kenyan shilling against the US dollar and euro, accounting for 88 per cent of the value of the debt stock.

„At this stage, the public debt share is equal to 65 percent of the Gross Domestic Product (GDP). Debt-to-GDP indicators suggest that economic effort and increase in income capacity is necessary to meet public debt obligations,” said the Parliamentary Committee on Public Debt and Privatization.

Expenditure on public debt accounts for 88 percent of CFS expenditure.

This level of expenditure reflects the growing rigidity in our fiscal structure with interest expenditure of Sh1.01 trillion or 5.6 per cent of GDP in the 2024/2025 financial year. „Addressing this issue is critical in improving budgetary flexibility and ensuring efficient resource allocation,” the panel said.

Depreciation of the Kenya shilling against the dollar led to an increase in foreign debt stocks to Sh1.2 trillion in the 2023/2024 financial year and a rise in interest rates increased the cost of the overdraft facility to Sh4.2 billion. Sh12.6 billion.

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