The Public Finance Management Act (PFM) is the framework that regulates fiscal policy (income and expenditures) in the country. It bars the country from accumulating debt load over half of the GDP.
Recently, the CBK announced that the borrowing spree has broken this limit. Thus, no more borrowing by the national government could be legally tenable. After the CBK announcement, Kamau Thugge, a National Treasury honcho and principal secretary, has come out out the woodwork with a quiver of mischief.
Before the National Assembly, he has submitted an amendment to the PFM. He is seeking for the amendment of the PFM to clarify the meaning of national debt.
He argues that internal debt should be excluded from computation of national debt limit. Internal debt include government bonds and other local borrowings.
If local debts are excluded from computation of national debt limit as per Kamau Thugge proposal, the overall percentage, of national debt will reduce to about a percentage of 30 to the GDP.
This will leave a huge room for the national treasury to do more borrowing without violating the PFM bar. With floodgates for borrowing open, the national treasury will certainly go into borrowing spree, as they have done in the past.
The proposals by Kamau are evil.The debt load has just become ridiculous. It looks like a spell of accumulating debt, most of which will soon become odious debt, has been cast upon the National Treasury.