Kenya to spend over Ksh.39 billion to settle KQ debts

The Kenyan government will cough a whooping Ksh.17 billion as a debt guarantee for Kenya Airways.

This is according to the Parliamentary Budget Office Report, which revealed that the amount would be a Ksh.2.51 billion top-up of what the state spent last year.

“As of June 2022, the total outstanding guaranteed debt was Ksh.136.6 billion consisting of Ksh.68.1 billion and Ksh.67.3 billion commercial and bilateral loans respectively showing an elevated exposure to contingent liabilities,” the report stated.

The report provides an analysis of the Consolidated Fund Services (CFS) expenditure for the 2023/2024 Financial Year.

It also states that the government will spend a further Ksh.22.16 billion – in estimates in the fiscal year 2024/2025 repaying the KQ loan.

Public debt service, pensions, salaries for those holding constitutional offices and guaranteed debt are among the expenses falling under CFS.

Article 213 of the Constitution and Section 58 of the Public Finance Management (PFM) allow the government to give loan guarantees to State entities upon approval by Parliament.

Kenya Airways’ guaranteed loan become non-performing and a liability of the national government.

According to the report, their repayment is a charge on the Consolidated Fund as provided for in Section 60 of the PFM Act.

The airline has for the past 11 years remained a loss-making state corporation.

It posted a Ksh.38.26 billion loss in 2022, more than double what it posted the previous year, taking the national carrier’s accumulated loss to Ksh.172.68 billion.

KQ’s board said the airline was on course to hit the break-even point this year and profitability by 2024.

Lawrence Baraza

Lawrence Baraza is a prolific writer with competencies in Digital Media, Print, and Broadcast. Baraza is also a Communication Practitioner currently spearheading Digital content on Metropol TV's Digital Desk.

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