Governor Oparanya highlights effect of unchecked borrowing on equitable share to Counties

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Kakamega Governor Wycliffe Oparanya (left) said there is an urgent need to cap national government borrowing
Kakamega Governor Wycliffe Oparanya (left) said there is an urgent need to cap national government borrowing

The government’s borrowing has affected the equitable share to Counties according to Council of Governor chair Wycliffe Oparanya. Speaking to the press on the state of devolution, the Kakamega Governor said the government’s borrowing rate needs to be capped, “The effect has been that the equitable share to Counties is significantly reduced. Further, the fiscal space for County governments to access external loans is yet to be made available thereby limiting Counties resource envelope,” he said.

The government’s borrowing and the burgeoning debt gap has caused jittery reactions from many in Kenya, including leaders who have urged the government to reduce its borrowing rate. During the 2019/2020 budget presentation, however, Treasury CS Henry Rotich insisted that the country’s debt is manageable, and moved to dispel any fears. By September last year, Kenya’s debt stood at Kshs 5.15 trillion, domestic debt was Kshs 2.54 trillion and external debt Kshs 2.61 trillion, with the latest move to seek funds from China towards the extension of the SGR from Naivasha to Kisumu highlighting the worrying trend.

Oparanya lauded the gains of devolution in many other areas, including Agriculture but also noted that the Treasury’s delay in disbursing of funds has continued to negatively affect devolution. He said the disbursement of monies to Counties from the Treasury has been outside the mandated time frame provided for in the Public Finance Management (PFM) Act throughout the 6 years of devolution. The Act requires that transfers be made on every 15th date of the month.