GAZETTE NOTICE NO. 5085

pursuant to regulation 206(3) of the Public Finance Management (National Government) Regulations, 2015 and are intended to be applied to the management of the Sinking Fund established under regulation 206(1) of the Regulations. Citation 1. These Guidelines may be cited as the Public Finance Management (Sinking Fund) Guidelines, 2021. 2. In these Guidelines, unless the context otherwise requires— “Act” means the Public Finance Management Act, 2012; “Administrator of the Fund” means the Head of the Public Debt Management Office as assigned under regulation 206 (1); “Committee” means the Sinking Fund Advisory Committee established under paragraph 7 of these Guidelines; “Cabinet Secretary” has the meaning assigned under section 2 of the Act; “Fund” means the Sinking Fund established under regulation 206(1) of the Regulations; “loan” has the meaning assigned to it under Article 260 of the Constitution; and “Regulations” means the Public Finance Management (National Government) Regulations, 2015. Objects and Purposes of the Fund 3. (1) The objects and purpose of the Fund is to provide funding for the redemption of Government loans, and payment of expenses of, or incidental to, redemption of an issue of national government loans. (2) Notwithstanding the generality of sub-paragraph (1), the Fund shall be used to— (a) cushion for amortization of liabilities arising from national government loans; (b) facilitate debt restructuring and smoothening of maturity profile; (c) redeem maturing national government loans to alleviate rollover risks; (d) build up resources for meeting maturities of loans and securities issued in the domestic and international debt capital markets; (e) correct any perceived mispricing along the yield curve; (f) buy back of a national government loan obligations in the debt market; (g) meet the cost of switches and early redemption of national government loan obligations; and (h) meet costs incidental to the loans. Capital of the Fund 4. The capital of the Fund shall be as appropriated by Parliament from time to time. Source of the Fund 5. The source of the Fund shall consist of— (a) Consolidated Fund Budget Vote for redemption of debts and other debt related expenses from the Exchequer and shall be remitted to the Fund continuously; (b) monies appropriated by Parliament for the purposes of the Fund; (c) fees and commissions earned by the Public Debt Management Office in execution of its mandate; (d) income invested from the balances of the Fund; 5:03 PM THE KENYA GAZETTE 25th May, 2021 2316 2316 (e) foreign exchange gains from external loans to the National Government; (f) any moneys accruing to or received by the Fund from any other lawful source, with the approval of the Cabinet Secretary; and (g) any other source to the Fund provided for by an Act of Parliament Expenditures of the Fund 6. (1) Payments out of the Sinking Fund shall be for the purposes specified in paragraph 3 of these Guidelines. (2) The expenditure incurred on the Fund shall be on the basis of the annual work plans and cost estimates which shall be prepared by the Administrator of the Fund, recommended by the Committee and approved by the Cabinet Secretary at the beginning of the financial year to which they relate. (3) Any revision of the approved annual work plans and of any cost estimate shall be recommended by the Committee and approved by the Cabinet Secretary. Establishment of the Committee 7. There is to be established a committee known as Sinking Fund Advisory Committee. (2) The Committee shall consist of— (a) the Principal Secretary in charge of finance as the Chairperson; (b) the Director-General, Public Debt Management Office as the Secretary; (c) the Director-General, Accounting Services and Quality Assurance; and (d) the Director-General Public Investment and Portfolio Management. Functions of the Advisory Committee 8. The functions of the Committee shall be to— (a) provide advice on the administration of the Fund; (b) provide policy linkages between the Fund and other public finance management functions including the linkage into the National Government’s budget estimates; (c) review and recommend for approval of statutory and management reports of the Fund before submission to the Cabinet Secretary for approval and onward transmission to the Auditor-General with a copy to the Controller of Budget; (d) review and recommend the annual work plans, annual securities issuance plan, and investment plans to the Cabinet Secretary for approval; and (e) review and recommend for approval the revenue and expenditure estimates of the Fund to the Cabinet Secretary in each financial year. Fund Administrator 9. The head of Public Debt Management Office shall be the Administrator of the Fund in accordance to regulation 206 (1). 10. The functions of the Administrator of the Fund shall be to— (a) undertake day-to-day operations of the Fund; (b) supervise and control the administration and management of the Fund; (c) prepare the Fund’s work plan including, annual securities issuance and redemption plan and investment schedule and submits to the Committee for consideration and recommendation by the Cabinet Secretary; (d) borrow and deposit monies into the Fund for the purposes of debt redemption on approval by the Cabinet Secretary; (e) formulate policies to achieve the objects and purpose of the Fund and submit to the Committee for consideration and recommendation for approval by the Cabinet Secretary; (f) prepare the estimates of revenue and expenditure of the Fund for each financial year and submit to the Committee for consideration and recommendation for approval by the Cabinet Secretary; (g) prepare quarterly management reports for review and recommendation by the Committee to the Cabinet Secretary for further necessary actions; (h) open any bank account of the Fund in accordance with section 28 of the Act with approval of the Cabinet Secretary; (i) prepare statutory reports in accordance with the provisions of the Act, submit them to the Committee for review and recommendation to the Cabinet Secretary for approval before transmission to the Auditor General with a copy to the National Treasury, Controller of Budget and Commission on Revenue Allocation; and (j) perform such other duties as may be considered necessary by the Cabinet Secretary from time to time for the proper administration and management of the Fund and such a duty shall be assigned in writing. Secretariat to the Fund 11. The Cabinet Secretary shall appoint the secretariat to the Fund and ensure that the Fund has the resources and skills to manage the day-to-day operations of the Fund. Meetings 12. (1) In the absence of the Chairperson in any meeting of the Committee, any member appointed in writing by the Principal Secretary in charge of finance shall chair the meeting. (2) The Secretary to the Committee may delegate the functions of the Secretary to the Director Debt Recording and Settlement from time to time. (3) The Committee may, from time to time, co-opt other members as it may deem necessary, for the proper and efficient discharge of its functions. (4) The Committee shall meet not less than four times in every financial year and not more than three months shall elapse between the date of one meeting and the next. (5) The quorum for the conduct of meetings of the Committee shall be three members. (6) The Committee shall regulate its own procedure. Financial Year 13. The financial year of the Fund shall run from the 1st July to the 30th June. Investment 14. Monies received in the Sinking Fund, may be invested in Government securities in accordance with the approved cash flow plan. Audit of the Fund 15. The Fund shall be audited in accordance with the provisions of Constitution, the Act and the Public Audit Act, 2015. Reporting Framework 16. (1) The Administrator of the Fund shall prepare the annual financial and non-financial reports in accordance with the Act and the Public Audit Act, 2015 and submitted to the Accounting Officer for approval before submission to the Auditor-General for audit. (2) The annual financial and non-financial statements shall be submitted to the Auditor-General for audit within three months after the end of the financial year in accordance with the Public Audit Act, 2015 and as may be prescribed by the Public Sector Accounting Standards Board and a copy submitted to the Controller of Budget. (3) In addition, the Administrator of the Fund shall prepare an annual general performance report of the Fund to be submitted with the report under subparagraph (1). 25th May, 2021 THE KENYA GAZETTE 17. In the event of winding-up of the Fund— (a) the Administrator of the Fund shall pay any credit balance in the Fund into the National Exchequer Account to the credit of the National Government while other assets of the Fund shall be transferred to the Ministry for the time being responsible for matters relating to finance; (b) the Cabinet Secretary shall pay any deficit in the Fund from the Funds of the National Government in the National Exchequer Account upon approval of Parliament; (c) the Committee shall prepare the final winding up report not later than six months from the date of the decision to wind up the Fund and submit the financial and non-financial reports to the Auditor-General for audit with a copy to the Cabinet Secretary; and (d) the Cabinet Secretary shall submit a final statement of accounts of the Fund to Parliament. Dated the 11th May, 2021. UKUR YATANI, Cabinet Secretary, The National Treasury