State of Kenyan Economy: public debt and exchange rates

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State of Kenyan Economy: public debt and exchange rates

The Central Bank of Kenya in their weekly newsletter of 24th Nov 2017 reported that investor confidence is return after the Supreme Court of Kenya ruling on presidential election.

The Kenya Shilling exchange rate against major global currencies has remained stable for the last one week.

“In the week ending 23rd November, 2017 the Kenya Shilling strengthened against the US Dollar but lost some ground against the Sterling Pound, the Euro and the Japanese Yen.” Central Bank of Kenya.

In the East African Community (EAC) region, the Kenyan Shilling gained strength against the Rwanda Franc, remained stable against Burundi Franc and Tanzania Shilling but weakened slightly against the Ugandan shilling.

According to the Central Bank of Kenya (CBK), the Gross domestic debt changed from Ksh. 2.11 trillion on 28th July 2017 to Ksh. 2.184 trillion on 17th Nov 2017. This was driven by increase in treasury bonds from Ksh. 1.331 trillion to Ksh. 1.409 trillion during the period under focus.

In terms of percentage, as at 17 Nov 17 64.5 per cent of government domestic debt was made up of treasury bonds. This was an increase from 63.1 per cent as at the end of June 2017.  Treasury bills were 32.9 per cent; CBK Overdraft to government was 1.1 percent. It’s not only individuals and corporations who seek bank overdrafts; even the government seeks this service to finance her programs.

Banks are the largest buyers of government domestic debt in Kenya at 54.8 per cent as at 17th November, 17. They are closely followed by pension funds at 27.7 per cent and parastatals at 6.7 percent; insurance companies at 6.3 per cent and investors at 4.4 per cent.

Data from the National Treasury and Central Bank of Kenya shows that as at Sep-17 Kenya’s domestic debt stood at 2,176.59 billion while public and publicly guaranteed external debt was Ksh. 2,310.20 billion. In total public debt stood at Ksh. 4,486.79 billion. This is what economists and public finance practitioners called public debt and it is a source of lots of debates.

SOURCE: Weekly Statistical Bulletin: Key Monetary and Financial Indicators published on November 24, 2017.

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Geoffrey Kerosi is a prolific Kenyan writer based in Nairobi City. Email: Skype: gkerosi Whatsapp: +254713 639 776 YouTube: Kerosi TV

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