Controller of Budget admits approving Sh53bn loan payment

October 24, 2015 8:40 am
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Odhiambo told Journalists on Friday that the Treasury wrote to her on June 28, 2014 seeking approval for the repayment of the syndicated loan, which was subsequently approved/CFM NEWS
Odhiambo told Journalists on Friday that the Treasury wrote to her on June 28, 2014 seeking approval for the repayment of the syndicated loan, which was subsequently approved/CFM NEWS
NAIROBI, Kenya, Oct 24 – Controller of Budget Agnes Odhiambo now says she approved for Treasury to pay the Sh53 billion syndicated loan, recanting her earlier statement before The Public Accounts Committee that she did not give consent.

Odhiambo told Journalists on Friday that the Treasury wrote to her on June 28, 2014 seeking approval for the repayment of the syndicated loan, which was subsequently approved awaiting funding.

She says the Treasury paid the loan directly from a special account to the lenders, explaining to her that this was done to save on foreign exchange losses.

“Subsequently the Auditor General audited the statement of the receipts from the National Exchequer for the financial year ending 30th June 2014 and issued an unqualified opinion,” she said.

“The proceeds of the Sovereign Bond were deposited in a Special Account to which the Controller of Budget is not a signatory,” she explained.

On Thursday, Odhiambo had stated that the Treasury paid the syndicated loan from the offshore accounts despite warnings from her office that the settlement would be in breach of Article 206 of the Constitution.

The clause requires that all government monies be deposited in the Consolidated Fund Services (CFS) before approval for use is sought from the Controller of Budget.

Speaking during the press briefing, Cabinet Secretary Henry Rotich said the Treasury was within its legal framework in paying the Sh53.2 billion.

Rotich explained that the Treasury is aware of the provision of the Constitution which provides for all money raised or received by or on behalf of the National Government be paid in to the Consolidated Fund unless exempted but however said the provisions should not be read in isolation.

“The Public Finance Management Act 2012 also states that in case of an external government security, applied in part, to pay at closing, pre-negotiated expenses associated solely and exhaustively with the borrowing, including but not limited to, the fees commissions and expenses of lenders, financial arranges, managers and book runners, fiscal agents, trustees, paying agents exchange and information agents syndicated agents counsel and other expenses of a similar nature arising from the external loan or external government security,” he explained.

Rotich said that all proceeds from the Sovereign Bond were accounted for and the position was confirmed by the Auditor General.

“In regard to the funding of infrastructure projects, the total exchequer released to ministries/departments amounted to Sh196.92billion which was the available resources from the sovereign bond,” Rotich said.

He pointed out that some of the projects have been completed while others are ongoing.

Kenya issued a sovereign bond in June 2014 for the purposes of general budget support including funding infrastructure and the repayment of the syndicated loan amounting to $600million plus accrued interest of $4.6 million.

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