The country's domestic debt stands at 15 billion USD
21 July 2014, 18:46
Nairobi - The country's internal debt has hit
15 billion U.S. dollars following a rise in government borrowing, according to
the Central Bank of Kenya (CBK).
The debt has jumped by nearly a billion dollars since March,
as government aggressively reaches out to the public through the sale of
Treasury bills and bonds to finance its activities.
The value of Treasury bond has hit 10.5 billion dollars
while Treasury bills stand at 3.5 billion dollars.
The rest of the debt is in form of clearing items in
transit, advances from commercial banks, Pre-1997 Government Overdraft and Tax
Reserve Certificates, the CBK's bulletin showed.
In March, the domestic debt stood at 14.1 billion dollars.
The debt has increased by more than 3 billion dollars since the beginning of
the year following intense borrowing by government.
CBK and Treasury attribute the rise to the increase in
Treasury bills and bonds. Between May and July for instance, the value of the
two government securities has increased by 845 million dollars.
Of Treasury bills and bonds, it is the value of the latter
that has increased significantly during the period, growing by 460 million
dollars in the two months.
The long-term securities the government sold include a five-
year and 20-year fixed bonds.
Kenya has intensified domestic borrowing in the past weeks
despite successfully raising two billion dollars from sovereign bond sold to
investors in Europe and U.S.
The sale of the bond, according to analysts, was to make
government cut down its appetite for Treasury bills and bonds to lower interest
rates in the East African nation.
Analysts noted government domestic borrowing has not dropped
because of high demand for funds to cater for projects in the security,
transport, education and health sectors.
Treasury Cabinet Secretary Henry Rotich has, however,
assured that domestic borrowing will drop significantly as government eyes more
"We are exploring new ways to borrow from the
international market. We are currently looking at the Diaspora, Samurai and
Sukuk bonds. Definitely we are going to cut our domestic borrowing this
financial year," said Rotich.
Money raised from the bond, according to the official, will
be used to fund infrastructure projects as well as pay off 600 million dollars
loan acquired from several international banks including City Bank and Standard
Kenya's domestic debt surged beyond the midyear target,
according to CBK and Treasury. Treasury's Medium Term Debt Management Strategy
released in April had projected that the domestic debt would stand at 14.2
billion dollars by the end of June, which was about 30 percent of GDP.
The debt, however, hit 14.3 billion dollars in early June
and has increased in the past week to reach 14.9 billion dollars last week.
The domestic debt is mainly held by commercial banks (53
percent), insurance companies (9.4 percent) and pension funds (26 percent),
External public debt has also increased significantly,
hitting at about 12 billion dollars in June. The debt stood at 10.9 billion
dollars in March, rising from 9.8 billion in June, 2013, according to Treasury.
The money comprises of debt owed to bilateral lenders (30.2
percent), multilateral (61.9 percent), commercial banks (6.3 percent) and
suppliers' credit (2 percent).
The current total debt stock is equivalent to about 55
percent of GDP, compared to 51.7 percent of GDP in June 2013.
Treasury notes Kenya's public debt is manageable and is in
line with the East African nation's debt strategy.