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Kenya Slashes Domestic Borrowing By 36.8%

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The Kenyan treasury will be borrowing 36.8 percent less than what it had initially said it would borrow through Treasury bills and bonds.

According to Henry Rotich, Kenya’s cabinet secretary for the national treasury, the government will be borrowing Ksh. 120 billion which is Ksh. 70 billion less than what it usually borrows.

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This means that the country’s government has broadened its foreign-debt portfolio with bonds as it recently received an additional $750 million from international investors on the back of its maiden bond.

The government reopened its two billion US dollar sovereign bond that it issued in June through a process known as a Tap. The reopening of the bond saw East Africa’s biggest economy receive an oversubscription of about 400 percent increasing the size of the existing bond to $2.75 billion .

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It was not long ago that the governement said that it was planning to reduce the domestic borrowing by 47.4 percent for the 2014/2015 financial year. The government had intended to reduce its initial intended borrowing in the domestic market to about Ksh. 100 billion.

Previously, the domestic markets were the key source of the government’s borrowing to finance the budget deficit as a result of the state being unable to meets its expenditure commitments using domestically raised revenue and externally sourced grants and borrowing.

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Last year, the rate of increase in domestic borrowing outpaced external borrowing. Kenya’s public debt, hit 52 percent of national output in 2013, up from 44.5 percent the previous year. Still public debt remains one of the major economic policy issues confronting the Kenyan government.

The treasury is planning to exploit the huge investor appetite with plans for suksuk and diaspora bonds set for the next financial year.

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Caroline Vutagwa
Caroline Vutagwahttps://my.techmoran.com
Minding my own business is not enough for me that's why you will always find me minding Africa's Businesses as well as Technology and of course letting you know about it. Talk to me on [email protected]

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