The Public Debt Management Office (PDMO) is established under Section 62 of the Public Finance Management (PFM) Act. It operates within the National Treasury and is responsible for managing Kenya’s public debt, ensuring debt sustainability, and minimizing borrowing risks.
📌 The Public Service Commission appoints the Head of the PDMO through a competitive process.
🔹 Functions of the Public Debt Management Office
The PDMO plays a critical role in managing Kenya’s debt portfolio by ensuring that government borrowing is sustainable and cost-effective. Its functions include:
1️⃣ Managing Government Debt Policy
✔ Develops and implements government debt management strategies.
✔ Minimizes financing costs over the long term while managing associated risks.
2️⃣ Maintaining a Reliable Debt Database
✔ Tracks all loans taken by:
- The National Government
- County Governments
- State entities
✔ Includes government-guaranteed loans and debt-related transactions.
3️⃣ Preparing Debt Management Strategies
✔ Develops and updates the Medium-Term Debt Management Strategy (MTDS).
✔ Conducts debt sustainability analysis to assess borrowing risks.
4️⃣ Implementing the National Borrowing Plan
✔ Designs and executes Kenya’s borrowing strategy for the fiscal year.
✔ Ensures proper debt servicing of outstanding loans.
5️⃣ Issuing Government Debt Securities
✔ Acts as the principal agent for issuing government bonds and treasury bills.
✔ Manages the auction and sale of debt instruments on behalf of the National Treasury.
6️⃣ Monitoring Borrowing and Debt Transactions
✔ Evaluates all debt-related activities to ensure they align with Kenya’s debt management framework.
✔ Ensures borrowings remain within set risk parameters.
7️⃣ Issuing Loan Guarantees
✔ Assesses and manages risks in loan guarantees issued by the National Government.
✔ Approves guarantees for state entities and county governments.
8️⃣ Engaging in Derivative Financial Transactions
✔ Transacts in financial derivatives to manage risk and debt sustainability.
✔ Benchmarks practices against global best practices in debt management.
🔹 Role of the Cabinet Secretary for Finance in Debt Management
The Cabinet Secretary (CS) for Finance has a supervisory role over the PDMO. Their responsibilities include:
✔ Developing policy and financial frameworks for debt management.
✔ Delegating operational borrowing decisions to the Head of the PDMO.
✔ Ensuring that the PDMO has adequate resources and expertise for effective debt management.
✔ Being accountable to Parliament for Kenya’s public debt strategy.
🔹 Reports Prepared by the Public Debt Management Office
The PDMO is required to submit critical reports to the Cabinet Secretary for Finance and the Commission on Revenue Allocation (CRA), including:
📌 1️⃣ Medium-Term Debt Management Strategy (MTDS) – Aligns with the Budget Policy Statement.
📌 2️⃣ Government Borrowing Plan – Details Kenya’s borrowing needs for the fiscal year.
📌 3️⃣ Statistical Reports on Debt & Borrowing – Summarizes current and projected debt levels.
📌 4️⃣ Annual Performance Reports – Reviews debt sustainability and borrowing efficiency.
📌 These reports must be published and shared with all County Governments.
🔹 Public Debt Management Office’s Relationship with County Treasuries
📌 Collaboration with County Governments
✔ Assists county governments in managing debt and borrowing plans.
✔ Ensures counties adhere to national debt management policies.
📌 County Governments’ Obligations
✔ Must provide all debt-related data to the PDMO upon request.
✔ Must ensure transparency in county borrowing practices.
🔹 Objectives of the Public Debt Management Office
📌 The PDMO ensures that Kenya’s debt policies align with the following objectives:
✔ 1️⃣ Minimize borrowing costs over the long term while managing risks.
✔ 2️⃣ Develop Kenya’s financial market for government securities.
✔ 3️⃣ Ensure intergenerational equity in public debt – future generations should not bear disproportionate debt burdens.
📌 Conclusion
The Public Debt Management Office (PDMO) plays a pivotal role in ensuring Kenya’s debt remains sustainable while balancing borrowing needs.
✅ Monitors and manages national & county debt.
✅ Develops borrowing strategies to minimize risks.
✅ Issues government bonds & loan guarantees.
✅ Ensures accountability and transparency in debt management.
📌 Effective debt management is crucial to Kenya’s economic stability, and the PDMO is at the center of ensuring responsible borrowing and public finance sustainability.
