Kenya Paid Sh1.44 Billion in Interest on Undrawn Foreign Loans, Auditor General Reveals
In a recent revelation, Kenya’s Auditor General Nancy Gathungu has disclosed that the country paid Sh1.44 billion in interest on foreign loans that it has yet to receive. This significant amount was highlighted in the Auditor General Report on National Government for the fiscal year 2023.
According to the report, the Sh1.44 billion represents commitment fees on undrawn loan amounts. These are payments made by the government to lenders for loans that have been approved but not yet disbursed. The fees are essentially compensation to the lenders for keeping the loan available to the borrower.
The revelation comes at a time when Kenya is grappling with a heavy debt burden and scrutinizing its financial management practices. The commitment fees are often a point of contention as they represent costs that can accumulate even when the funds are not actively being utilized for development projects or other government needs.
Auditor General Nancy Gathungu’s report underscores the financial strain that such payments can impose on the country’s budget. The fees, while standard in international finance, have raised questions about the efficiency of loan management and the government’s handling of its debt obligations.
In her report, Gathungu noted that the commitment fees were paid during the period under review, specifically highlighting the financial outlay of Sh1.44 billion on these undrawn amounts. This figure is a part of a broader examination of the government’s financial transactions and obligations.
The findings have sparked calls for greater transparency and accountability in the management of foreign loans. Critics argue that the substantial amount spent on commitment fees could have been directed towards pressing developmental needs or used to alleviate other financial pressures faced by the government.
