(6) Derivative transactions entered into in terms of this section shall be published and publicised. Power of national government to lend money. 57. (1) The national government is authorised to lend money but only in accordance with terms and conditions prescribed by the regulations approved by Parliament. (2)A national government entity may lend money only if authorised to do so by an Act of Parliament and in accordance with terms and conditions prescribed in regulations. (3) The Cabinet Secretary may, in relation to any money lent by the national government under this section— (a) accept money payable under the loan in any currency considered appropriate by the Cabinet Secretary in consultation with the Central Bank of Kenya; and (b) agree at any time to revise upwards any security given in respect of that loan.

(4) Money loaned under this section is payable only— (a) from an appropriation for development expenditure; or (b) from some other authority approved by Parliament for the purpose for which the loan is made. (5) The Cabinet Secretary shall ensure that a security given in respect of a loan under this section is given in the name of the national government. (6) The Cabinet Secretary may, on behalf of the national government, carry out any of the responsibilities and exercise any of the powers of the national government with respect to The Public Finance Management Act, 2012 79 securing a loan granted by the national government. Power of Cabinet Secretary to guarantee loans.

58. (1) Subject to subsection (2), the Cabinet Secretary may guarantee a loan of a county government or any other borrower on behalf of the national government and that loan shall be approved by Parliament. (2) The Cabinet Secretary shall not guarantee a loan under subsection (1) unless— (a) the loan is for a capital project; (b) the borrower is capable of repaying the loan, and paying any interest or other amount payable in respect of it; (c) in the case of a private borrower, there is sufficient security for the loan; (d) the financial position of the borrower over the medium term is likely to be satisfactory; (e) the terms of the guarantee comply with the fiscal responsibility principles and financial objectives of the national government; (f) where Parliament has passed a resolution setting a limit for the purposes of this section— (i) the amount guaranteed does not exceed that limit; or (ii) if it exceeds that limit, the draft guarantee document has been approved by resolution of both Houses of Parliament; (g) the Cabinet Secretary takes into account the equity between the national government’s interests and the county government’s interests so as to ensure fairness; (h) the borrower complies with any conditions imposed by the Cabinet Secretary in accordance with the regulations; (i) the Cabinet Secretary has taken into account the recommendation of the Intergovernmental Budget and Economic Council in respect of any guarantee to a county government; and (j) the loan is made in accordance with provisions of this Act and any regulations made thereunder.

(3) Parliament may approve a draft loan guarantee document as provided by subsection (2)(f)(ii) only if satisfied The Public Finance Management Act, 2012 80 that— (a) the guarantee is in the public interest; (b) the borrower’s financial position is strong enough to enable the borrower to repay the loan proposed to be guaranteed and to pay interest or other amounts payable in respect of the loan; and (c) the loan is geared towards stimulating economic growth in a county government. (4) To enable Parliament to decide whether or not to approve a draft loan guarantee document as provided by subsection (3), the Cabinet Secretary shall prepare and submit to each of the House of Parliament a paper that— (a) gives details of the loan that is proposed to be guaranteed, including the amount of the loan, the terms of repayment, and the details of the interest or any other amount payable under the loan; (b) specifies the national government’s total contingent liability under guarantees given under this section; and (c) specifies any other information that the Cabinet Secretary considers relevant. Cabinet Secretary to submit a statement on loan guarantee to Parliament.

59. Not later than fourteen days after the guarantee is entered into, the Cabinet Secretary shall submit to Parliament and publish a statement— (a) stating that a guarantee is entered into; and (b) containing details of— (i) the guarantee, including the name and other particulars of the borrower whose loan is guaranteed; (ii) the duration and nature of the guarantee; (iii) a risk assessment in respect of the guarantee; and (iv) any other information prescribed by regulations for the purposes of this subsection. Money payable in respect of a guarantee to be a charge on the Consolidated Fund.

60. (1) Subject to subsection (2), money payable on a guarantee is a charge on, and is payable out of, the Consolidated Fund without further appropriation than this section. (2) Money payable on a guarantee shall be paid only if the payment has been authorised by the Controller of Budget. (3) Where money is paid out of the Consolidated Fund on a guarantee, the Cabinet Secretary shall submit a report to The Public Finance Management Act, 2012 81 Parliament giving details of the payment. (4) The Cabinet Secretary shall include in the report made under subsection (3)— (a) details of the guarantee; (b) the circumstances giving rise to the payment; (c) reasons why the borrower failed to pay; and (d) such further information as the Cabinet Secretary may consider relevant. Recovery of amounts paid on a guarantee.

61. (1) Money paid by the Cabinet Secretary on a guarantee, including any expenses incurred by the Cabinet Secretary in respect of the guarantee, shall— (a) be a debt due to the national government from the borrower whose loan was guaranteed; and (b) be recoverable from the borrower as a debt due to the national government by - (i) proceedings brought in a court of competent jurisdiction; or (ii) withholding a transfer of money in terms of Article 225 of the Constitution, if the borrower receives appropriations.

(2) Where Cabinet considers that the debt is more likely to be recovered if the borrower is allowed to pay the debt over a period of time, the Cabinet Secretary may enter into an agreement with the borrower to pay the debt over that period and at such intervals, and subject to such terms and conditions, as may be specified in the agreement. (3) The Cabinet Secretary shall not impose terms and conditions in an agreement under subsection (2) which are inconsistent with the terms and conditions specified in the guarantee document.

(4) Where the Cabinet Secretary enters into an agreement under subsection (2), no proceedings under subsection (1) (b) shall be taken unless the borrower defaults under the agreement. (5) The Cabinet Secretary shall ensure that any money received or recovered from a borrower in respect of money paid under a guarantee entered into under this section is paid The Public Finance Management Act, 2012 82 into the Consolidated Fund. The Public Debt Management Office Establishment and objectives of the Public Debt Management Office. 62. (1) There is established an office to be known as the Public Debt Management Office within the National Treasury.

(2) The Head of the Public Debt Management Office shall be recruited through a competitive process by the Public Service Commission. (3) The objectives of the Public Debt Management Office shall be to— (a) minimise the cost of public debt management and borrowing over the long-term taking account of risk; (b) promote the development of the market institutions for Government debt securities; and (c) ensure the sharing of the benefits and costs of public debt between the current and future generations. Functions of the Public Debt Management Office