MPs Seek Clarity on Ksh 13B World Bank Loan
Parliamentarians have demanded answers regarding a Ksh13,2 billion loan owed to the World Bank by Kenya as part of long-term financial agreements.
Wednesday, August 30, the Public Investments Committee on Commercial Affairs and Energy of the National Assembly noted that details of the loan being repaid at 1.5% per annum remain sparse.
In particular, the committee chaired by David Pkosing, MP for West Pokot, demanded to know why the government did not disclose the amount of interest accrued on the loan as a consequence 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 of 30 June 2021, was translated to Kenya Shillings based on the exchange rate on the transaction date.
“As a result, the foreign exchange gain or loss was not disclosed in the financial statements,” noted the committee.
According to the Committee, the International Public Sector Accounting Standard mandates that foreign currency monetary items be translated using the closing exchange rate. However, the MPs were uncertain as to whether or not this actually occurred.
“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.
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In part, the committee’s statement read: “Accuracy, completeness, and fair presentation of the loan balance totaling Ksh13,201,986,800 could not be confirmed under the circumstances.”
MPs also disclosed that the 2008 loan was initially intended to finance water and sanitation services in the Coast region through the Coast Water Works Development Agency.
In addition, the committee stated that the loan amount was Ksh4.6 billion, payable over 13 years beginning on March 30, 2013, with an annual interest rate of 1.5%.
However, the MPs were concerned that they lacked precise information regarding how the State had handled the loan repayment.
“The annual repayment of US$ 4,906,636 included principal payments of Ksh460,631,562.00 (US$ 3,168,030) and interest payments of Ksh252,793,312.40 (US$ 1,738,066).
“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 of 30 June 30, 2021,” the statement read in parts.
MPs Seek Clarity on Ksh 13B World Bank Loan