The Government borrowing requirement and the level of public debt has been consistent with the overall fiscal framework supporting macro-economic stability for sustainable growth over the medium term. It is anchored on the Medium Term Debt Strategy (MTDS) revised annually and tabled in Parliament as part of the documents supporting Budget Estimates.
The Government debt management objective remains two-fold: to raise resources through borrowing to meet central government budgetary requirements at minimum cost and prudent level of risk; and to promote the development of domestic debt markets.
The purpose of the 2012 MTDS is to guide central government borrowing in the financial year 2012/13 while providing a path for sustainable level of debt over the medium term. The MTDS evaluates both costs and risks of various scenarios and recommends an optimal debt management strategy for implementation during the financial year. In FY 2012/13, the Treasury will implement measures to simplify and disseminate information in the 2012 MTDS through easily accessible channels to ensure wider outreach and understanding by the general public.
The institutional arrangement for public debt management will be reviewed to enable the Treasury execute its mandate effectively and efficiently under the Constitution of Kenya, 2010. The implementation of the Constitution requires enormous amount of resources, part of which will be sourced through borrowing. It is therefore important to closely monitor the burden of public debt both at the National and at County Government level so as not to undermine economic growth.
As we implement the Constitution of Kenya, 2010, it is important that both the burden of and benefit from public borrowing is equitably shared between the present and future generations. Indeed, it is one of the key principles of public finance under Article 201 of the Constitution of Kenya, 2010. Going forward, it is therefore expected that County Governments’ fiscal strategies will be geared towards maintaining a sustainable level of debt.