Kenya treasury debt service set to reduce by Sh14 billion

Business richard mugarura 2019-01-16 08:44:15 20 0

The Treasury has cut the projected cost of servicing public debt for the current fiscal year by Sh14 billion, reflecting the lower interest rates on issued securities.

Kenya had projected under the June 2018 budget that interest payments on domestic debt for the fiscal year 2018/19 would hit Sh285.6 billion but has now cut that to Sh271.6 billion as per the 2019 draft Budget Policy Statement (BPS) released last weekend.

This is despite the projected new borrowing for the fiscal year rising by Sh78 billion to Sh631.5 billion.

Interest costs for foreign debt remain unchanged at Sh114.4 billion, with the stability of the shilling protecting the country from exchange-rate inflation on the dollar debt.

The government securities’ yield curve has come down on the short end, and flattened on the longer term paper, largely due to the reluctance of Central Bank to take up expensive bids from the market even when faced with high maturities and a need to close the domestic borrowing target gap.

The expectation by the Treasury that the interest payments will fall below initial projections could be an indicator that the stance will continue.

Courtesy

Daily Nation

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