Section 62 of the Public Finance Management Act (2012) establishes the Public Debt Management Office in Kenya. It is housed within the National Treasury. The Public Service Commission should recruit the Head of the Public Debt Management Office through a competitive process.
Objectives of the Public Debt Management Office in Kenya
The objectives of the Public Debt Management Office should be to—
- minimise the cost of public debt management and borrowing over the long-term taking account of risk;
- promote the development of the market institutions for Government debt securities; and
- ensure the sharing of the benefits and costs of public debt between the current and future generations.
Functions of the Public Debt Management Office
The functions of the Public Debt Management Office in Kenya include—
- carrying out the government’s debt management policy of minimising its financing cost over the long-term taking account of risk;
- maintaining a reliable debt database for all loans taken by the national government, county governments and their entities including other loans guaranteed by the national government;
- prepare and update the annual medium-term debt management strategy including debt sustainability analysis;
- prepare and implement the national government borrowing plan including servicing of outstanding debts;
- acting as the principal in the issuance of Government debt securities on behalf of the National Treasury;
- monitor and evaluate all borrowing and debt-related transactions to ensure that they are within the guidelines and risk parameters of the debt management strategy;
- process the issuance of loan guarantees including assessment and management of risks in national government guarantees.
- transact in derivative financial instruments in accordance with best international practices benchmarked to the debt management offices of other governments that are internationally respected for their practices.
Role of Cabinet Secretary (Finance) in Public Debt Management Office
The Cabinet Secretary should—
- develop the policy and financial framework in accordance with Constitutional principles within which the Public Debt Management Office operates;
- delegate to the Head of the Public Debt Management Office in Kenya the operational decisions on borrowing and debt management and the day-to-day management of the Office;
- ensure that the Public Debt Management Office has the resources and skills to manage the debt and borrowing according to international best practices for liability management; and
- be accountable to Parliament for the work of the Public Debt Management Office.
The Public Debt Management Office in Kenya should prepare and submit to the Cabinet Secretary and the Commission on Revenue Allocation the following reports –
- the Medium Term Debt Management Strategy consistent with the Budget Policy Statement;
- the government borrowing plan for the approved Annual Budget;
- the statistical and analytical reports on debt and borrowing; and
- the annual performance reports of the Public Debt Management Office.
The reports referred to above should be published and publicised and a copy of each sent to each county government.
The Public Debt Management Office may appoint agents to provide technical advice or undertake administrative functions for the management of debts provided that control and accountability for these functions remain with the Cabinet Secretary.
Relationship with county treasuries in debt management
At the request of a County Treasury, the Public Debt Management Office in Kenya should assist a county government in its debt management and borrowing.
At the request of the Public Debt Management Office, the County Treasury should supply the Public Debt Management Office with any information that shall enable it to execute its mandate efficiently.