Members of Parliament have demanded answers over a Ksh13.2 billion loan which Kenya owes World Bank as part of long-term financial agreements.
The National Assembly Public Investments Committee on Commercial Affairs and Energy on Wednesday, August 30, noted details of the loan that was being paid at 1.5 per cent per annum remain scanty.
In particular, the West Pokot MP, David Pkosing-led committee demanded to know why the government failed to share details of money that was accumulated on the loan as a result of fluctuating dollar exchange rates.
“Contrary to Paragraph 27 of International Public Sector Accounting Standard (IPSAS) 4 – The Effects of Changes in Foreign Exchange Rates, the loan balance totaling 13,201,986,800 as at 30 June, 2021, was translated to Kenya Shillings based on the exchange rate on the transaction date.
Members of the National Assembly Public Investments Committee on Commercial Affairs and Energy holding a meeting in Nairobi on Wednesday, August 30, 2023.
“As a result, the foreign exchange gain or loss was not disclosed in the financial statements,” the committee observed.
According to the Committee, International Public Sector Accounting Standard requires foreign currency monetary items be translated using the closing exchange rate, which the MPs were not sure happened.
“The accounting policy applied by the Agency in translating foreign denominated transactions and balances was not disclosed in the notes to the financial statements as required by the accounting standard.
“In the circumstances, accuracy, completeness and fair presentation of the loan balance totaling Ksh13,201,986,800 could not be confirmed,” the statement by the committee read in parts.
The MPs also revealed that the initial purpose of the loan which was offered in 2008 was meant to finance water and sanitation services in the Coast region through Coast Water Works Development Agency.
Further the committee stated that the loan amount was offered at Ksh4.6 billion and repayable in 13 years with effect from March 30, 2013, at an interest rate of 1.5 per cent per annum.
However, the MPs expressed concern that they did not have the exact details of how the loan repayment had been managed by the State.
“The annual repayment of US 4,906,636 entailed a principal sum of Ksh460,631,562.00 (US$ 3,168,030) and interest of Ksh252,793,312.40 (US$ 1,738,606).
“However, records on repayment of the loan were not provided for audit verification. In addition, the repayment of Ksh713,424,874.40 (USS 4,906,636) due annually was not disclosed separately under other current liabilities in the statement of financial position as at 30 June 30, 2021,” the statement read in parts.
Treasury CS Njuguna Ndung’u appearing before a Senate Committee on Monday, April 24, 2023
Parliament of Kenya