The government’s net domestic borrowing for the six months to December 2019 hit a fresh record on the back of fast-maturing debt and underperforming revenue receipts, official statistics showed this week.
Data released by the Central Bank of Kenya, the government’s fiscal agent, shows the Treasury contracted Sh156.16 billion in new borrowing from local investors between July and December 2019, more than double the amount raised in a similar period a year earlier.
In total, the growth in public debt (domestic plus external debt) in the six-month period stood at Sh239.85 billion, the highest since Sh326.71 billion in the same period of 2015. The debt stood at Sh6.05 trillion at the end of the year, made up of Sh2.94 trillion in domestic and Sh3.11 trillion in foreign debt.
During the six-month period under review, the Government was under pressure to honour maturing debt with an option to roll over some of them, while revenue significantly fell short of target by Sh138.7 billion.
An earlier analysis by investment bank Genghis Capital indicated that nearly Sh222.51 in Treasury bills—Sh111.9 billion in 364-day paper, Sh52.7 billion in 182-day securities and Sh57.9 billion in 91-day facilities— were due for repayment between October and December 2019.
That was preceded with domestic maturities amounting to Sh346.93 billion in the previous quarter, composed of Sh197.81billion, Sh105.52 billion and Sh43.6 billion in 342-, 182- and 91-day papers, respectively, as well as Sh47.68 billion in bonds.
The Treasury, however, went slow on foreign borrowing, netting about Sh83.68 billion — nearly half of Sh163.68 billion inked in the July-December period of 2018.
Treasury secretary Ukur Yatani has recently indicated Kenya will cut down on expensive foreign commercial borrowing, especially from international capital markets (Eurobond).
The Treasury however has a target of Sh200 billion in commercial borrowing this financial year ending in June 2020.
“Accumulation of commercial borrowing especially issuance of sovereign debt securities in international markets will be curtailed to minimise the risks of external debt on fiscal space,” Mr Yatani said in the 2020 Budget Policy Statement which is before the National Assembly for approval.