Nairobi [Kenya], December 31: Interest rates on Kenya's government securities have closed 2023 at a historic high, putting the country in a tough position as it seeks to ramp up borrowing to fund a budget deficit.
The Central Bank of Kenya (CBK) said in its data released Friday evening that yields on Treasury bills had closed the year at a record of 16 percent, the highest ever, as those on Treasury bonds stand at 16.8 percent, with both yields having nearly doubled during the year.
The Kenya government in January 2024 seeks to raise 24 billion shillings (about 153 million U.S. dollars) from the short-term Treasury bills and 222 million dollars from the long-term Treasury bills, according to the CBK.
The yields on the securities have been rising as the government seeks to borrow more from the domestic market amid low participation in auctions by investors.
The Central Bank's benchmark rate has also increased to stand at 12.5 percent, a record high, signaling higher debt market and commercial bank rates.
The surge in interest rates means Kenya may have to cut borrowing from the domestic market and focus more on concessional loans from multilateral lenders.
Kenya recently said it would not seek to raise funds through sovereign bonds due to higher interest rates.
On Thursday, Njuguna Ndung'u, the cabinet secretary for the National Treasury and Economic Planning, said the government has developed a comprehensive plan for debt service payments to ensure it doesn't default to repay both domestic and foreign debt, combining higher revenue collection and concession financing.
Kenya's public debt currently stands at about 63 billion dollars, of which 30 billion dollars is domestic, according to CBK statistics.
Source: Xinhua
