Treasury Under Scrutiny for Unexplained Ksh.161 Billion in External Debt Repayments

In a hurry? Here’s a quick summary…

• The Auditor General flagged Ksh.161 billion in unexplained external debt repayments over three years, citing budgeting irregularities and incomplete documentation.
• Many project loans lacked feasibility studies, public participation, or legal approvals, raising concerns about accountability and potential misuse.

The National Treasury faced scrutiny on Wednesday over discrepancies in external debt repayments amounting to Ksh.161 billion across the last three financial years. 

Auditor General Nancy Gathungu, presenting a special audit report to the National Assembly’s Public Debt and Privatization Committee, highlighted significant anomalies in debt servicing for the financial years 2020-2021, 2021-2022, and 2022-2023. 

These variances exceeded the legally permitted 5% threshold, reaching up to 10% of approved amounts.

In her findings, Gathungu noted that debt repayments in 2020-2021 and 2021-2022 were underpaid by Ksh.1.4 billion and Ksh.83.3 billion, respectively, compared to amounts approved by the Controller of Budget. 

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Conversely, in 2022-2023, repayments exceeded the approved allocation by Ksh.77 billion. Treasury officials attributed these fluctuations to exchange rate variations of the Kenyan shilling against foreign currencies.

Baringo North MP Joseph Makilap raised concerns about potential corruption, citing violations of the Public Finance Management (PFM) Act, which prohibits procurement beyond approved budgets. Gideon Mokaya, Director of Public Audit at the Auditor General’s office, emphasized the need for accurate budgeting to minimize such variances in the future.

The audit also revealed gaps in accountability and project management. Of 32 sampled project loans, only 18 had undergone feasibility studies to justify their necessity, and 22 lacked evidence of public participation. 

These deficiencies led to projects without community input and heightened risks of double-financing or unbudgeted costs. 

Furthermore, only five loans had legal opinions from the Attorney General, raising questions about the approval process.

The Auditor General pointed out that incomplete documentation made it difficult to link borrowed funds to specific projects, further complicating oversight of the country’s debt servicing and project financing.