Auditor General raises serious doubts about RUTO’s recent Eurobond as she warns him against using the money to repay UHURU’s debts

Thursday, February 22, 2024 - Deputy Auditor General Joyce Ndung’u has cautioned the government of President William Ruto over the currency fluctuation after issuing the latest Eurobond.

Speaking to the Public Debt and Privatization Committee, Ms Ndung’u noted that the lack of stability by the Kenyan shilling is costing the government more money while repaying the loans including higher interest rates.

Additionally, the Deputy Auditor General raised concerns about the Treasury's dependence on the Eurobond to address the country's debt, pointing out that the government had issued another Eurobond worth Kshs233 billion, with an exchange rate of Kshs155.5 to the USD (US $1.5 billion).

She noted that the government was over-reliant on Eurobonds with a higher coupon rate, a strategy that was not sustainable in the long run.

Joyce Ndung’u was alluding to the latest Eurobond payment which saw the country make a partial payment of Ksh10.8 billion as interest for the USD2 billion 2014 Eurobond.

The interest rate of the payment was higher owing to the decline in the value of the shilling in comparison between the time of receiving the funds and the payment time.

In critiquing the government’s approach, Ndung’u noted that "While Eurobonds offer access to funds for development projects, managing repayment obligations remains a crucial challenge especially because of the shorter maturity period and increasing coupon rates."

Fluctuations in the Kenyan Shilling have presented a challenge for the Head of State, particularly as the Shilling has surged to historic levels, hitting the Ksh160 mark in mid-January 2024.

Besides the shilling's instability, the government has also experienced challenges with foreign exchange reserves having dipped for the better part of 2023.  

However, the sudden upward trajectory of the shilling has raised speculations on the shilling's performance among Kenyans, despite bankers attributing the gains to the successful pricing of the infrastructure bond and the Eurobond.


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