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Kenya's domestic debt increases to 14.7bln USD

Xinhua, February 16, 2015 Adjust font size:

Kenya's domestic debt has surged to 14.7 billion U.S. dollars, an increase of 400 million dollars since January.

The debt has generally been on the rise since December 2014, according to new data from the Central Bank of Kenya (CBK) received Monday. However, it accelerated faster in the last week of January, rising by 293 million dollars.

The sharp rise in domestic debt is attributed to increased sale of Treasury bonds and bills. Treasury bonds contribute over 73 percent of the domestic debt, with the value standing at 11 billion dollars, up from 10.5 billion dollars at the beginning of January.

The National Treasury in January successfully re-opened five- year and 20-year bonds that attracted 220 million dollars from both local and foreign investors.

Currently, the institution is selling a new two-year bond and has re-opened a 10-year bond as it targets to raise 275 million dollars, which will push up the overall domestic debt.

Similarly, the government has intensified the sale of Treasury bills of between 33 million dollars and 55 million dollars. The value of Treasury bills, on the other hand, stands at 3.3 billion dollars, up from 3.2 billion dollars at the start of this year.

Other domestic debt whose value has been on the rise include overdraft at the CBK, clearing items in transit, advances from commercial banks, Pre-1997 Government Overdraft and Tax Reserve Certificates.

The East African nation's domestic debt, according to the World Bank, is sustainable as it consists of 46 percent of the gross domestic product.

East African nation plans to issue more bonds this year to investors in Europe and Asian markets to cut domestic borrowing that is too costly.

Meanwhile, the CBK data showed that Kenya's foreign exchange reserves have risen marginally to over 7.2 billion dollars or 4.65 import cover, from 7.17 billion dollars or 4.63 months of import cover at the end of January.

The marginal rise in the foreign exchange reserves means the CBK can effectively save the shilling, which is currently exchanging at an average of 91 against the dollar, when it is under-pressure from international currencies. Endi