Wednesday, February 28, 2024 - Treasury Cabinet Secretary Njuguna Ndung'u has clarified the rationale behind Kenya's decision to continue going for long-term foreign loans, despite the ongoing Eurobond payback process.
Appearing before the Public Debt
and Privatization Committee, chaired by Balambala Member of Parliament Abdi
Shurie, the Cabinet Secretary shed light on the Medium-Term Debt Management
Strategy (MTDS) for the financial year 2024/25.
According to the CS, long-term
borrowing is a bid to minimize refinancing risks and lighten the Average Time
Maturity for domestic and total debt.
"Use of long-tenor Treasury
bonds for refinancing domestic debt is set to raise new deficit funding
resources along with a reduction in the proportion of short-term domestic
debt," CS Njuguna stated.
CS Njuguna highlighted that
despite the borrowing, Kenya will meet its current and future debt payment
obligations without compromising other budgeted programs.
"The latest Debt
Sustainability Analysis report indicated that public debt remains sustainable,
though the distress level is elevated due to the adverse effects of multiple
shocks experienced by the country since 2020,” CJ Njuguna clarified.
He further assured the committee
that the treasury was working together with other stakeholders in the market
such as the Central Bank of Kenya (CBK) and Capital Market Authority (CMA)
to maximize the domestic debt reforms.
Furthermore, the National
Treasury was assured of sustaining the domestic debt and improving the
performance of the primary issuance as well as promoting the vibrancy of the
secondary market.
His clarification comes a few
days after the Deputy Auditor General questioned why the National Treasury
relied too much on foreign loans to offset public debts.
The Deputy Auditor General
further cautioned the government over fluctuation in the currency following the
Ksh219 billion Eurobond payback.
The Kenyan DAILY POST
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