The Institute of Certified Public Accountants Kenya (ICPAK) has warned that the country is likely to plunge into a dept crisis if the government does not keep an eye on pilferage of funds.
The institute stated on Friday that a Report from the Auditor General had found that there was gross misuse of funds in the Devolved Governments which spent taxpayer’s money on funding unnecessary foreign trips and non-existent entities.
The Chairman of the Institute Julius Mwatu who spoke in Kisumu said the misuse of funds needed to be rein upon swiftly if the government wanted to achieve the big four agenda; manufacturing, food security, improved nutrition, proper health and descent housing.
“If not, the agenda will suffer the same fate as that that has faced similar programs rolled out in the past,” said Mwatu.
Mwatu also raised concern on the glaring and accumulating dept that has engulfed the country noting that it was time prudence was administered as a strategy to manage the prevailing debt.
“Debt statistics point to a need to re-look at our debt strategy and we must therefore strive to negotiate debt concessionary terms covering both the cost and tenure of resulting debt,” he said.
On average, the debt tenure of public loan stock in the country he said stood at between 15 and 20 years but disclosed that optimality is achieved at longer loan tenure.
He singled-out Japan, most indebted country in the world, with debt to GDP of 249 percent but was not having problems servicing its loans.“Japan owes twice the size of its economy.
But it has easy time servicing its loans as their tenures go up to 100 years. Kenya should think of negotiating for such,” the Chairman stated.As from December 2017, the public debt he stated stood at 4.573 Trillion which translated to 2.22 Trillion of Domestic debt and 2.353 Trillion in external borrowings.
The National Treasury he said was proposing that out of 1.68 Trillion budgeted for as ordinary revenue in the financial year 2018/19, 688 Billion will be injected in servicing the loans.
This, he insisted will translate to 40 percent of ordinary revenues going into debt servicing.
“It is therefore observed the overall spending deficit shall stand at 7.2 percent of GDP, which Treasury proposes to plug through additional borrowing. This will further argument the public debt problem,” warned the ICPAK Chairman..