The Controller of Budget Margaret Nyakang’o now wants loans received from multilateral agencies to be audited.
In the National Government Budget Implementation Review Report released on Thursday, February 22, Nyakang’o said that the annual interest paid for concessional financing has averaged 14.5 percent which is expensive.
She also noted that the loans have a low impact in terms of economic development.
“These concessional loans are usually given by multi-lateral agencies such as the IMF and the World Bank under serious austerity measures such as increases in taxation.
“My office recommends an audit of these loans and the projects they support to ascertain the effectiveness of these loans. Our analysis has revealed that the average interest paid on concessional loans has averaged 14.5% for many years, which is not cheap by any standards,” said Nyakang’o.
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The Controller of Budget also poked holes in the government’s announcement that Kenya will settle the Eurobond in trenches to avoid one bullet payment as has been the norm.
“Other loans will be maturing at the same time and not necessarily the Euro bond loan only. These other repayments, which include domestic debt, will still pose a heavy burden on the cashflows shortly,” Nyakang’o noted.
She further waded into the monetary policy noting that the Central Bank of Kenya (CBK) should revisit the interest rate adjustment at the earliest opportunity.
“The MPC should be convened to reduce the domestic interest rates. Our current problems as a country in matters of inflation are driven by the supply side while the consumption on the side of the household is not driven largely through debt,” the report added.
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