Published On: Mon, Dec 8th, 2014

Kenya’s domestic debt rises to $14.47 Billion as Government intensifies borrowing

Kenya’s domestic debt rose by a record 255 million U.S. dollars last week to top 14.47 billion dollars.

Central Bank of Kenya (CBK) data indicated Monday that the debt rose from 14.21 billion the previous week to 14.47 billion dollars. The increase is the highest since September when the debt stood at 13.6 billion dollars as the government intensifies borrowing from both domestic and foreign market to finance its activities.

Treasury bonds and bills contributed immensely to the huge jump in the domestic debt during the week. The value of the government papers rose from 13.4 billion dollars to 13.9 billion dollars in the period under review.

The overdraft at the Central Bank, on the other hand, increased from 123 million dollars to 183 million dollars.

However, the value of other domestic debt that include clearing items in transit, advances from commercial banks and Tax Reserve Certificates, according to the regulator, declined from 730 million dollars to 333 million dollars thus slowing down the overall rise of the debt.

Analysts attribute the surge of East African nation’s domestic debt to increased government borrowing to fund its activities that include infrastructure projects.

Kenya, according to the African Development Bank, needs 4 billion dollars annually for roads, water and energy projects, among others. The government last month sold two bonds, one for 15 years and the other for 12, worth 389 million dollars in total.

Besides the bonds, Treasury last week sold short-term securities namely the 91, 182 and 364 days bills of between 33.3 million dollars and 55.6 million dollars.

While the bills were not oversubscribed, they attracted massive interest from investors, particularly the 91 and 364 days papers, whose yields stand at 8.6 and 10.3 percent respectively.

And as the domestic debt surges, commercial banks are increasing their grip on the securities, with last week seeing the share of domestic debt held by the institutions rising from 53.3 percent to 53.6 percent.

Two weeks ago, East African nation’s Cabinet meeting chaired by President Uhuru Kenyatta gave nod for Treasury to increase the debt ceiling by 14.4 billion. The country is thus readying to sell several international bonds, including the Samurai in Asia, to raise more funds, according to Finance Cabinet Secretary Henry Rotich.

Meanwhile, Kenya’s foreign reserves continued with downward trend last week, falling to 6.8 billion dollars or 4.46 months of import cover from 6.9 billion dollars or 4.5 months of import cover.


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Kenya’s domestic debt rises to $14.47 Billion as Government intensifies borrowing
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