The National Assembly directed the Treasury to appoint a new director general for the public debt management unit within 60 days amid secrecy over the hiring process that began in January.
The Treasury and the Public Service Commission, which oversees the recruitment of civil servants, are guarded over the position which technically became vacant after Harun Sirima’s exit was announced in January.
Dr. Sirima has been in charge since 2018.
The office plays a crucial role in Kenya’s handling of public debt, including overseeing loan servicing, which has emerged as a major risk to the country.
The Planetarium Science Committee advertised the position in late January, but did not announce the list of people who sought the job, the shortlisted candidates and interview dates.
The Parliamentary Committee on Public Debt and Privatization has directed the Treasury to appoint the holder of this position within 60 days from 4 June – by 4 August.
“That, pursuant to Section 64 (1) of the Public Financial Management Act 2012, the National Treasury shall, within sixty (60) days, appoint the Head of the Public Debt Management Office as Accounting Officer in order to improve the operational efficiency of the Bank.” “Office in the management of public debt servicing expenditures,” the head of the committee, Abdi Shourie, told Parliament through a report he submitted to the House of Representatives on June 4.
The PSC traditionally publishes the names of candidates who have expressed interest in senior roles, those shortlisted and interview dates.
This information was not disclosed when the head of the Kenya Public Debt Management Office was appointed.
“Please consult the Principal Secretary to the Treasury for updates,” said PSC Chairman Anthony Mwaniki, who has the statutory mandate to appoint to the position.
Treasurer Chris Kipto said interviews with candidates were held on Tuesday (June 18) with six shortlisted candidates and one shortlisted.
“We conducted interviews yesterday (Tuesday 18 June) for a new Director-General and we have a candidate. Please wait for the PSC to communicate formally,” Dr Kipto said. “The Public Service Commission (PSC) is responsible for appointing the Director-General of the Public Debt Management Office. The committee advertised the position, shortlisted candidates and conducted interviews. National Treasury awaits PSC decision.”
Dr Sirima’s exit was announced at a time when Kenya was addressing acute liquidity challenges caused by uncertainty over its ability to access financing from financial markets ahead of the maturity of a $2 billion Eurobond in June this year.
In mid-February, Kenya sold $1.5 billion worth of new Eurobonds at significant cost to finance the buyback of a large portion of the $2 billion bond, which matures this week.
The country was on investors’ radar because they feared it might not be able to repay due to fiscal pressures.
The borrowing-fueled infrastructure drive is partly why Kenya’s debt-to-GDP ratio has risen to 70 percent.
Credit rating agency Fitch estimates that the country will spend nearly a third of its government revenue on interest payments alone this year, leaving little money for project spending.
Kenya’s public debt stood at Sh10.54 trillion as of April 2024, including external and domestic debt of Sh5.2 trillion and Sh5.3 trillion respectively.
Consolidated Fund Services (CFS) includes mandatory government expenditures on debt service payments, pensions and salaries for constitutional offices, and expenditure on these budget items is expected to reach Shs1.99 trillion and Shs2.06 trillion in the 2023/2024 and 2024 financial years. /2025 fiscal year respectively.
Interest payments on public debt are estimated at more than Sh1 trillion in the 2024/2025 financial year.
Kenya received the first issuance of Eurobonds worth $2.75 billion in two tranches – a 10-year note with an interest rate of 6.78 percent and a five-year note with an interest rate of 5.87 percent.
The five-year issue was partly repaid using proceeds from another $2.1 billion Eurobond issued in May 2019.
Debt fell by Sh598 billion from Sh11.4 trillion due to the appreciation of the Kenyan shilling against the US dollar and euro, which together account for up to 88 percent of the debt category.
At this level, the public debt stock is equivalent to 65% of GDP in nominal terms. The Parliamentary Public Debt and Privatization Committee said that debt-to-GDP indicators indicate that increasing economic effort and income capacity is necessary to meet public debt obligations.
Spending on public debt represents 88% of the Committee on World Food Security’s expenditures.
“This level of spending reflects increasing solidity in our fiscal framework as evidenced by interest spending in FY 2024/25 amounting to Sh1.01 trillion or 5.6 percent of GDP. Addressing this issue is critical to enhancing budget flexibility and ensuring Allocate resources efficiently.
The depreciation of the Kenyan shilling against the dollar in the 2023/2024 financial year led to an increase of up to Sh1.2 trillion in the stock of external debt and rising interest rates increased the cost of the overdraft facility by Sh4.2 billion to Sh12.6 billion.