Vihiga County Debt Management Policy FY 2017 – 2018 – 2019

EXECUTIVE SUMMARY
County Governments are required by law to prepare a strategy to manage their debt – this fact is
recognized by the Public Finance Management Act (2012) section 123 and its regulations sections 176 to
195 which requires submission of a Debt Management Strategy over the Medium Term to the County
Assembly on or before 28th February in each year. Since we have not changed status and the County has not incurred any debt, we shall adopt the same strategies of last financial year.
The debt management strategy paper provides clear objectives for debt management as well as a
framework for achieving these objectives. There are two key objectives. The first is to ensure that the
servicing and management of CGV’s financing requirements and payment obligations are met on a timely
basis, and at the lowest possible cost over the medium to long run, consistent with a prudent degree of
risk. The second objective is to support the development of the domestic securities market. In practical
terms, CGV must not go into arrears when it resumes borrowing, decisions must not be made on an ad
hoc basis, debt levels must be sustainable and affordable, and borrowed funds must be used to increase
the well-being of Vihiga County.
This document lays out plans for CGV’s debt management for the next five years. It targets three different
ways to meet these objectives. Firstly, it sets out the analysis required for a debt strategy and to determine annual borrowing limits, secondly it puts in place a borrowing framework that is intended to be
incorporated into Fiscal Responsibility Legislation and lastly, clarifies the responsibilities of the Debt
Management Unit (DMU) of the docket of finance and Planning.