The Treasury has set in motion plans to put up a web portal disclosing details of Kenya’s debt position in a move intended to raise transparency on the country’s public finances.
The investor relations page, similar to that used by listed companies, will have information on Kenya’s debt holders, laws on public debt, debt calendar and monthly reports keeping track of the country’s indebtedness.
The disclosures first announced by former Finance Secretary Henry Rotich during his Budget speech in June are also intended to enhance predictability in the issuance and trading of Treasury bills and bonds.
“Given the importance of Eurobonds in our debt portfolio, we will strengthen the debt office to adopt modern liability management instruments to reduce cost and settlement risks, in addition to introducing an investor relations unit," said Mr Rotich.
According to Treasury sources, the World Bank has been pushing for more disclosures since Kenya entered the Eurobond market, aimed at keeping international investors abreast of the country’s economic situation.
The Treasury has not been keen on publicly revealing details of the prospectus it uses to market Eurobonds abroad, with the media having to rely on leaked documents to publish information on the debt issues.
On May 16, Kenyans woke up to news that the government had secured Sh210 billion in a third Eurobond loan when the Treasury made the dawn announcement from London, catching unawares many Kenyans who did not have a clue that government officials were out in the international markets soliciting for a fresh Eurobond.
Kenya has borrowed almost 10 commercial loans from international lenders since President Mwai Kibaki’s 2011 debut four-year Eurobond, but details of these debts are kept secret, including their repayment terms.
In 2018, while seeking alternative funding, the Treasury sought to put out 30-year bonds privately placed with a few investors, away from the public eye.
"The National Treasury is planning issuance of Treasury bonds through private placement. The purpose of the meeting will be to undertake a market sounding exercise... towards the issuance and to discuss and agree on the bonds pricing methodology," read a letter seen by Reuters in July 2018.
The Investor Relations unit fashioned from Brazil’s transparency guidelines promises to bring prospectus level of detail to the public eye.
Information and statistics on issuances, buybacks, outstanding debt and its average maturity and life, maturity profiles and average costs for the debts, including domestic and external debt, will be available.
PFM rules on manageable debt levels, as well as the debt management strategies, will be referenced on the website.
The Yearly Issuance Calendar will have, at the start of each year, dates of auctions as well as the types of bonds to be offered in each auction.
Cat and mouse game
The Treasury has been playing cat and mouse with the public, offering different figures for different occasions, as noted by Parliament.
Farhiya Ali, the nominated Senator from Wajir County, said during a Finance Committee meeting with Treasury in March 2018 that Treasury has so many parameters that MPs no longer had an idea what kind of debt they were dealing with.
"We should agree on one metric because we keep hearing debt to GDP and some other figures which we cannot understand even us with financial background. What about the mwananchi whose taxes actually pay the debt?" Ms Ali posed.
Heavily-indebted countries have in the past fudged numbers to camouflage their debts, which only become apparent when their finances capitulate and they seek recue plans from multilateral lenders who require due diligence.
Mozambique’s tuna bonds and Congo’s secret loans with China are recent examples. To qualify for the IMF rescue, Congo instituted reforms to improve transparency in the management of public resources, particularly in its traditionally opaque oil sector.