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Borrowing in T-bills hits Sh1trn on State cash crunch
As per its medium-term debt strategy, the government prefers to use Treasury bonds for financing its budget deficit, with T-bills largely utilised as liquidity management tools by financial sector players.
The stock of the government’s domestic debt held in the form of Treasury bills has nearly doubled over the past year to cross the Sh1 trillion mark, pointing to a liquidity crunch for the State amid below-target tax collection.
The increase in the volume of outstanding bills also reflects increased demand for the securities by unit trusts, pension funds, and the government’s own housing fund, which parks excess cash in the papers.
