Source: National Treasury | Annual Public Debt 2017-18
In June 2016 compared to June 2015, the stock of Treasury bills increased by 84.4 per cent to Ksh 588,088 million from Ksh 318,929 million while the proportion held by commercial banks increased by 67.4 per cent to Ksh 361,859 million from Ksh 217,742 million. In the same period, holdings by pension fund institutions increased to 20.1 per cent from 12.8 per cent while proportion held by insurance companies decreased to 3.1 per cent from 6.5 per cent. The insurance, banking and pension industry adhere to investment guidelines set out by the Insurance Regulatory Authority, Central Bank of Kenya and the Retirements Benefits Authority respectively. The coordinated efforts between the government and the Central bank are important for the implementation of monetary policy and the stability of the financial system. This relates to the management of public debt by scrutinizing the maturity and size of the debt as well as the scheduled repayments of interest in a way that does not overwhelm national operations. For this reason, public debt should be structured in such a way that it does not create market shocks.
In the advent of increased Non-Communicable Diseases such as cancer that require long time treatment, reduction of the Out-of-pocket payments is key in sustaining affordability and access to health care services. These can be achieved through increased insurance both by the government and the private sector.
Treasury bonds are a secure, medium- to long-term investment tools that typically offer periodic interest payments semiannually throughout the bond’s life. The Central Bank auctions Treasury bonds on a monthly basis, but offers a variety of bonds throughout the year, so prospective investors should regularly check for upcoming auctions. Outstanding Treasury Bonds increased by 11.2 per cent to Ksh 1,152,041 million in June 2016 from Ksh 1,035,662 million in June 2015.
The medium term debt strategy for the financial year 2016/17 emphasized on the need to develop the domestic market by increasing the issuance of Treasury bonds over the medium term. The strategy targeted a mix of 60 percent and 40 per cent for external and domestic financing, respectively.
Trends in Kenya’s Total Domestic Public Debt Stock from 1999 – 2018 (In nominal terms) Source: Central Bank of Kenya The number of the Week: 2.1, this is the factor by which domestic debt has grown in the last five years. Domestic debt has nearly doubled in the last five years (2013-2018) Between 1999 and […]
Apart from the external sources, the government also borrows from the domestic market. This is done mainly through issuance of the treasury bonds and treasury bills. The issuance of the government securities by Central Bank of Kenya is done with an objective of achieving and maintaining price stability.
This blog aims at examining the trend in Kenya’s total borrowing from the domestic market from 1999 to 2018, this is represented in the chart below:-