NAIROBI (Xinhua) --
Kenya in this fiscal year has borrowed more from
internal than external sources despite the government planning to
borrow more from the latter.
The government, data from the Central Bank showed Tuesday, has so
far borrowed 2.3 billion U.S. dollars in this financial year that is
some two months to a close, against a target of 1.7 billion dollars.
On the other hand, the government has borrowed some 2 billion
dollars of the budgeted foreign borrowing, which was 4.6 billion
dollars representing 45 percent of the targeted amount.
The East African nation’s public debt currently stands at 37 billion
dollars, according to the apex bank, with domestic borrowing
accounting for 19.5 billion dollars and external sources the rest of
Analysts noted that with only two months remaining to the close of
the financial year, the government is expected to intensify
borrowing from the domestic market to avoid lengthy process involved
in sourcing funds externally.
“Given that the government has less than 2.5 months to the close of
the current fiscal year and the fact that borrowing from the foreign
market is a much longer process than borrowing from the domestic
market, the government is likely to use the domestic market to plug
deficit that is likely to arise,” said Cytonn, a Nairobi-based
Massive borrowing internally, according to Cytonn, however, creates
uncertainty in the domestic interest rate environment as it exerts
upward pressure on yields, resulting in longer term papers not
offering investors the best returns on a risk-adjusted basis.
However, despite seeking most of its funds locally, the government
has rejected bids that are above market. In the last three Treasury
bills and bonds auctions, the government has rejected expensive bids
from investors given that domestic borrowing is ahead of target.
Last week, the Kenya government re-opened two bonds to raise 291
million dollars for budgetary support. Analysts noted that while the
bond may be oversubscribed, the government would reject higher bids.
Kenya Revenue Authority missed its first half of 2016/2017 fiscal
year revenue collection target by 3.2 percent, and it is expected
not to attain its overall revenue collection target of 15 billion
dollars, an indication that the government would borrow more to plug