Kenya’s domestic debt swells by US$1.4 billion in three months

Kenya's domestic debt has surged to 15 billion U.S. dollars as government intensifies borrowing from the public, particularly through Treasury bonds.

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The debt stood at 13.6 billion dollars at the end of September, an indication that the government has borrowed from the domestic market 1.4 billion in less than three months, latest data from the Central Bank of Kenya showed Monday.

debtThe Kenyan government has been active at the debt market during the period to raise cash for budgetary support and infrastructure projects that include the financing of the standard gauge railway.

Several Treasury bonds have been issued between September and December, with investors cashing on their high yields.

Among them was the five-year fixed income bond worth 196 million dollars sold in November, which was massively oversubscribed.

Investors’ bids totalled 323 million dollars, with the government accepting 300 million dollars.

So far in December, the CBK has put on sale nine-year bond worth 294 million dollars at an interest rate of 15 percent. The bond has attracted bids worth 167 million dollars and 137 million dollars accepted.

CBK is further raising more cash from the short-term Treasury bills whose interest rate is on the rise after months of downward trend.

Data from the regulator showed that between October and December, the CBK has raised over a billion dollars from Treasury bonds with Treasury bills bringing in about 380 million dollars.

Kenya’s public debt currently stands at 28.4 billion dollars as the government too sustains external borrowing to finance its activities.

External debt has been rising equally faster as the government engages several of its bilateral partners, including China, Japan and the U.S. in different infrastructure projects in the energy and transport sectors.

In October, Kenyan government borrowed a syndicated loan of over 588 million dollars. The money, according to Treasury, would go to finance projects in roads, energy, agriculture and water sectors.

Most of the public debt, according to Treasury, is currently domestic, and is 54 percent of the Gross Domestic Product (GDP), up from 52.8 percent in June.

A weak shilling, according to analysts, has exacerbated the country’s public debt, making it surge due to the currency fluctuation. The shilling is currently exchanging against the dollar at 102, up from 96 some months back. Enditem

Source: Xinhua

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