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Kenya's internal debt hits $16.3 billion, country aggressively borrows

Staff writer |
Kenya's domestic debt has hit $16.3 billion, the latest data from the Central Bank of Kenya (CBK) showed.

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As the country aggressively borrows internally to finance its budget, its domestic debt which stood at $15.1 billion at the beginning of February, has accelerated swiftly during the following months.

During the period, CBK's data indicated that the government intensified borrowing, particularly through Treasury bills, whose percentage of total debt rose from 26 to 30.1.

The value of debt held in Treasury bills currently stands at $4.8 billion, up from $3.7 billion at the beginning of February.

On the other hand, Treasury bonds which account for 69.8 percent of the total debt, went down from 73.9 percent at the start of February.

The value of debt held in the bonds last week stood at $10.8 billion, up from 10.6 billion dollars at the beginning of February.

Other borrowings that have pushed up the debt include the overdraft at the CBK, where the government has borrowed about $460 million, an increase from $373 million two months ago.

Other domestic debt is held in clearing items in transit, advances from commercial banks, pre-1997 government overdraft and tax reserve certificates, according to the apex bank.

The bonds floated during the two months include a five and ten years securities whose interest rates stood at 14 and 14.3 percent respectively.

The bonds worth $248 million attracted massive interest from investors raising $533 million and accepted 299 million dollars.

Last month saw investors' appetite for the securities more than double as they rushed to cash in before yields, which currently stand at between 9 and 12 percent after a rise, plummeted.

The increase in domestic debt pushes up Kenya's total public debt to over $31 billion, with the external debt contributing about $15 billion of the amount.

The debt, according to the treasury economic reviews, is 56 percent of the gross domestic product, a new high.

International Monetary Fund classifies Kenya's public debt as low-distress risk, which means it is manageable.

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