In the current financial year, at least Sh1.8 trillion is required to refinance a debt of about Sh5.4 trillion as of last year, almost 50 percent of the country’s total projected revenues.
“This will require cautious domestic revenue management in the face of other rising expenditure priorities,” the PBO report says.
It adds that the rise is mainly associated with the repayment of syndicated loans, international bonds and a 43 per cent domestic debt.
Meanwhile, the Budget and Appropriations Committee is considering a proposed bill by Emgwen MP Alex Kosgey to cap public debt at Sh6 trillion.
However, the PBO is of the view that it remains the function of the Gross Domestic Product (GDP) and the public debt management office to determine the optimal debt portfolio.
Currently, MPs have no role in controlling the government’s borrowing but Mr Kosgey wants the Treasury Cabinet Secretary to always seek the approval of the National Assembly before this happens.
The report comes as the government seeks Sh368 billion from China to finance its third phase of the standard gauge railway (SGR) project- -from Naivasha to Kisumu.
But even as this unfolds, Alego Usonga MP Samuel Atandi has proposed a legislative proposal to provide stringent measures, that touch on the Public Finance Management Act, to control the government’s appetite for borrowing.
Currently, Parliament is only tasked with putting a ceiling on how much the government should borrow compared to its GDP.
The Jubilee administration has ramped up spending since 2013 to build much-needed roads, a railway, bridges and electricity plants, driving up borrowing to plug the budget deficit.
The increased debt has seen Kenya commit more than half of its taxes to loan repayment, leaving little cash for the roads, affordable houses and the ailing health sector.