Government to use Sh17.2 billion to pay KQ.

The government will use Sh17.19 billion to pay Kenya Airways guaranteed debt, the Parliamentary Budget Office report shows.

The report which provides an analysis of the use of Central Government Fund Services (CFS) for the Financial Year 2023/2024, said the amount will be an increase of Sh2.51 billion last year.

Public debt service, pensions, salaries for those who hold constitutional offices and guaranteed debt are among the costs that fall under the CFS.

Article 213 of the Constitution and Article 58 of Public Finance Management provide conditions for the government to provide loan guarantees to Government institutions after approval by Parliament.

“As of June 2022, the total guaranteed debt was Sh136.6 billion, including Sh68.1 billion and Sh67.3 billion of trade and bilateral loans respectively, indicating a high probability of potential debts,” the report said.

The report also noted that the loan guaranteed by Kenya Airways does not materialize and becomes the responsibility of the national government whose repayment is the payment of the Common Fund as stipulated in Article 60 of the USM Act.

The report added that the government will use an estimated expenditure of Sh22.16 billion in the financial year 2024/2025 to repay the KQ loan.

The amount will drop slightly to Sh19.55 billion in 2025/2026 and Sh19.55 billion in 2026/2027.

Kenya Airways net loss more than doubled to a record Sh38.26 billion in the financial year ended December 2022 due to rising financing costs after the government assumed responsibility for servicing one of its loans dollar value.

The net loss increased 1.4 times from Sh15.87 billion set in 2021 and took the accumulated loss of the national company to Sh172.68 billion.

The board, however, said the airline is on track to break even this year and be profitable by 2024.

The last time the national organization made a profit was in 2012 when it closed with a total income of Sh1.66 billion.

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