Ndung’u backs tax reforms, concessional loans to cut public debt


National Treasury Cabinet Secretary Nominee Prof. Njuguna Ndung’u has favoured the acquisition of concessional financing in the short-term to ease the country’s current public debt.

Prof. Ndung’u who was appearing before the National Assembly Committee on Appointments vetting cabinet secretary nominees said the concessional loans would help create fiscal space needed to carryout development by retiring expensive loans taken by the previous administration.

“I think right now the way the situation is given the multiple shocks and even the supply side shocks that are quite prevalent. The best would be to look for concessional financing that would retire most of the debt, especially the domestic debt which is very expensive. Its taking quite a large proportion of recurrent expenditure of about 33pc,” said Prof. Ndung’u.

According to latest data from the Central Bank of Kenya (CBK) current public debt stands at Ksh 8.6 trillion with domestic debt amounting to 4.4 trillion as of October this month with the balance being external debt.
Kenya currently spends Ksh 1 trillion to service its public debt at the expense of development.

While responding to questions by committee members, the ex-CBK governor said he would be pro-active buffers which will ease the rising cost of living which has been triggered by drought and external shocks which have since affected supply side especially food and fuel.

Ndung’u while defending his nomination said his regime will work on four key areas in the medium term and long term strategies that will register strong economic growth.

These include protecting private investments such as those in health, food, and nutrition, develop, regulate and protect markets to ensure increased income, reform the tax system to allow for mobilization of domestic resource and utilize digital space.

Kenya Kwanza administration has committed to cut Ksh 300 billion in recurrent expenditure and raise Ksh 3.3 trillion in revenue in the current fiscal year.

Prof. Njuguna however absolved himself from any wrongdoing during his tenure as the CBK governor between 2011 and 2015.

The first issue was his involvement in the money printing contract to De La Rue in 2012 where taxpayers are said to have lost billions. According to Ndung’u, the tender for money printing was done by the CBK Procurement Committee.

Ndung’u also denied any involvement in weakening of the shillings during his tenure, collapse of Imperial Bank and the controversial sale of Grand Regency Hotel to the tune of Ksh 2.8 trillion in 2008.

“I was an agent of government and this was a government-to-government sale and I was the one who negotiated and received the payment on behalf of the government,” added Prof. Ndung’u.

He said the transaction gained Kshs. 3.114 billion used in the dredging the Lamu Port. The hotel was sold at Ksh 2.8 billion.

On his wealth, Prof. Ndung’u who is currently the Executive Director of African Economic Research Consortium said he is worth Ksh 950 million.


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