Kenya to cut domestic borrowing by about half
05 August 2014, 08:17
Nairobi - Kenya plans to cut its domestic borrowing by about 47 percent this financial year to stimulate economic growth, the presidency said in a statement on Monday.
The World Bank trimmed the 2014 economic growth forecast by 50 basis points to 4.7 percent in June, citing poor rains and growing insecurity in Kenya, east Africa's biggest economy.
A series of bombings and gun attacks by Somali al Shabaab militants has damaged Kenya's tourism sector. The Islamist group wants Kenya to withdraw its troops from Somalia where they are fighting as part of an African Union peacekeeping force.
The presidency said the Treasury plans to borrow 100 billion Kenyan shillings in the 2014/2015 financial year, down from about 190 billion shillings it borrowed last year.
Kenya's debut $2 billion Eurobond issued in June drew bids of $8.8 billion. President Uhuru Kenyatta has in the past said he hopes the bond would cut the government's local borrowing requirement, which would in turn help reduce interest rates.
The presidency said Kenyatta was confident the Eurobond has "created room for banks to lend to the private sector".
The budget for 2014/15 announced in June anticipated a budget deficit of about 7.4 percent of gross domestic product and local borrowing of 190.8 billion shillings ($2.18 billion), or 4.1 percent of GDP.