Treasury to borrow Sh130.4bn in 3 months to March

The Treasury is expected to borrow Sh130.4 billion in the next quarter of the financial year ending March to finance the budget amid low income receipts.

National Government receipts at the end of October stood at Sh803.1 billion equivalent to 30.9 percent of the total revised receipt target amount of Sh2.598 trillion in the current financial year 2019/2020.

Total tax income collected was also below target as at end of the period, expected to be Sh601.9 billion in the first four months, equivalent to 33.3 percent if the Kenya Revenue Authority was to achieve full collection. But only Sh493.3 billion, a 27.6 percent proportion of target achieved in the period, representing a shortfall of Sh108.6 billion.

“We see there is a 2.4 percent shortfall by end of October for FY2019/20. Based on the current borrowing target, we expect higher borrowing on the back of missed revenue targets,” Sterling Capital Limited analyst Renaldo D'Souza said.] According to data by the investment analyst’ firm, Fixed Income Note has shown even on this, domestic borrowing has remained above the target at 39.3 percent ahead of other receipts in the fiscal year, a move aimed at countering the shortfall in revenues.

About Sh168.6 billion was raised from the domestic debt market in the period, of the total target of Sh429.4 billion.

This has been pushed by subdued subscription to domestic debt by local investors as the government bet on the bond issuances.

In November, the Central Bank of Kenya received a total of Sh133.1 billion in bids of the Treasury Bills and Treasury Bonds against Sh167.7 billion offered, equivalent to a 79.4 percent subscription rate.