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Kenya’s public debt could be more than the reported Sh10.6 trillion as concern is raised on how much credit has been accumulated by public institutions through non-guaranteed loans and unremitted statutory deductions.
While the latest Annual Public Debt Management Report shows the public debt as of June 2024 stands at Sh10.6 trillion, the Office of the Auditor General shows this amount could be more if counties and state corporations reported correctly.
Additionally, the fact that many public institutions are not remitting statutory deductions like the National Social Security Fund (NSSF) means the figure could be higher.
Auditor General Nancy Gathungu described this non-remittance as “debt in kind.”
Ms Gathungu speaking last week during the release of a new report by the National Treasury said the public debt should include commercial loans owed by the counties since the amounts used to service them are taxes, through shareable revenue.
She said when it comes to guaranteed debts, public institutions do not provide complete information.
“Guaranteed debt is not complete because we have some entities that are not providing financial statements for audit,” said the Auditor General. She further noted that non-guaranteed debt has also been excluded yet if these institutions default, it is the government through taxes that will come to their aid.
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“If a State-owned enterprise enters into debt, and we exclude it from the books, if it defaults, where does it get money from? At the end of the day, it is the risk and reputation image of this country,” said Ms Gathungu. “We are seeing borrowing [by State enterprises] from one commercial bank to pay another.”
This, she said, is notwithstanding the exorbitant overdraft charges that these agencies deal with to access the money.
“Non-guaranteed debt is not being adequately reconciled with public debt, yet at the end of the day we will still pay with our public resources,” said the Auditor General.
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