By Reporter
The Public Accounts Committee (PAC) has questioned the National Treasury over the KSh533.7 billion the government paid in interest on domestic borrowing during the 2023/2024 financial year, amid growing concerns over the rising cost of public debt.
The Committee raised the issue while examining the Auditor-General’s reports for the financial year. Total interest paid on public debt stood at KSh762.44 billion.
The Committee, chaired by Tindi Mwale (Butere), questioned Principal Secretary Dr Chris Kiptoo on the audit findings.
Members called for a national discussion on the rising public debt.
They also sought clarification on the total amount owed by the government.
Dr Kiptoo attributed increased domestic borrowing to limited access to external financing during the period.
He said the cost of domestic borrowing remained high because interest rates were determined by commercial market conditions. He added that the shilling was under pressure before the partial repayment of the Eurobond in 2024.
The Principal Secretary said domestic debt currently accounts for 57 per cent of public debt, while external debt accounts for 43 per cent. However, he noted that domestic interest rates had declined, lowering borrowing costs.
Dr Kiptoo further said that half of every shilling collected by the Kenya Revenue Authority goes towards servicing debt interest. He welcomed the Committee’s proposal for a national discussion on public debt.
Members also questioned the Treasury over pending bills, which they said stood at KSh175 billion. Dr Kiptoo said the outstanding historical pending bills had previously amounted to KSh255 billion. The government had since paid KSh80 billion.
He added that Cabinet had approved payment of the remaining bills, with the process expected to begin within two weeks.
The Committee also raised concerns over delays in exchequer releases. Dr Kiptoo said the Treasury was up to date with disbursements and that county governments, state departments and state agencies were not owed any funds by the Exchequer.
