Treasury surpasses domestic debt borrowing target amid growing T-bond interest

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Last week, the Treasury revealed it hit the domestic borrowing target of Sh409 billion for 2019/2020. This is in line with the increasing uptake of bonds and bills to the tune of Sh15.7 billion from June’s auction.

In the Friday briefing, CBK reveals its initial target of Sh389 billion had to be revised by Sh20 billion to cater for government borrowing. The move came amidst the backdrop of factors such as the locust outbreak and the Covid-19 pandemic. Both led to a decline in tax collection to levels lower than expected.

“The share of T-bills was rather high, and we needed to reduce it to increase the average time to maturity of the overall portfolio, which is what has happened. It is one of the successes of this fiscal year,” said Patrick Njoroge, CBK governor.

Staying ahead of its target has allowed the CBK to strategize into lengthening its maturity of domestic debt profiles to 5.7 years from 4.1 years two years ago.

With it also came the government extended borrowing, which totaled to a net Sh18.4 billion after the Sh40 billion June bond sale. The Treasury had earlier taken up an Sh49.3 billion loan against its maturities worth Sh30.9 billion.

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The Author of this Article is a registered Financial & Investment Analyst with Institute of Certified Investment and Financial Analyst. If your require more information Email: info@finsolutions.co.ke or +254 780216631

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