Intensified borrowing pushes up Kenya’s domestic debt

Increased borrowing from the domestic market in the last two months has pushed up Kenya's internal debt to 14.4 billion U.S. dollars, official figures show.


This is a rise of about 1 billion U.S. dollars from 13.5 billion dollars where the domestic debt stood in early August before it started to surge, data from the Central Bank of Kenya (CBK) showed Monday.


The debt has been on a faster rise as the CBK sought to bolster a weakening Kenyan shilling that was facing stiff pressure from international currencies, in particular, the U.S. dollar.

The apex bank raised its benchmark rate to 11.5 percent, effectively helping to push up yields on the lucrative government securities.

This in turn attracted massive interest from investors, making the bank to borrow more from the domestic market.
The CBK in the past auctions has been borrowing up to 200 million U.S. dollars in a week from 91, 182 and 364-day bills, whose interest rate surged to a high of 23 percent from 8.2 percent in July.

For the 182 and 364-day bills respectively, the bank had floated bills worth 118 million dollars, 59 million dollars for each, and received bids amounting to 223 million dollars and 227 million dollars.

It accepted 85 million dollars from the 182 days and 78 million dollars for 364 days Treasury bills.

This increased intake saw the debt surge to 14.4 billion dollars, according to the CBK, down from 14.3 billion dollars the previous week.

On Oct. 30, the debt stood at 14.2 billion dollars and on Oct. 16, 13.6 billion dollars and 13.5 billion dollars at the beginning of the same month, according to the CBK data.

The rise in domestic borrowing raises the overall East African nation’s public debt, which currently stands at 28.4 billion dollars or 54 percent of the Gross Domestic Product, up from 52.8 percent in June, according to the Treasury.

External debt has also accelerated, with the government last month borrowing a syndicated loan of over 588 million dollars when it ran out of cash to finance projects in roads, energy, agriculture and water sectors. Enditem

Source: Xinhua

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