World Bank faults Treasury on its debt strategy

The World Bank has faulted the national Treasury for poor management of debt in what is likely to pile pressure on Cabinet Secretary Henry Rotich.

In a new report, the Washington-based lender noted that Kenya’s score on the sub-cluster of debt management declined by 0.5 to 4.0 last year from 4.5 in 2016.

The global lender cited weak capacity of Treasury’s Debt Management Office and failure to implement the country’s debt management strategy.

The report ranks countries in sub-Saharan Africa that are eligible for concessional loans on economic management, structural policies, policies for social inclusion and equity and public sector management and institutions.  

Debt experts

The World Bank regretted that without adequate staff and clear leadership and accountability, the office faced challenges in carrying out its work. It also noted that Treasury had been dragging its feet, with the implementation of reforms to strengthen the debt strategy pending for several years. Treasury recently announced that it was recruiting debt management experts who would provide guidance in determining borrowing ceilings for national and county governments.

The global lender also blamed the country’s poor performance on debt management on paying lip service to its framework on prudent debt management.  

“Another factor was that in November 2016, the Government of Kenya published the Medium-Term Debt Management Strategy for 2017/2018 to 2019/2020. Although on paper the Medium-Term Debt Management Strategy provides a framework for prudent debt management, it is not clear that it is being followed, considering the sovereign debt trajectory that has kept increasing at a sustained pace over the past years,” reads the report titled Country Policy and Institutional Assessment 2017.

It comes at a time the country’s growing public debt, currently estimated at Sh4.8 trillion, has come under sharp focus.