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T-bills proportion of domestic debt falls to 30 percent

cbk

Central Bank of Kenya. FILE PHOTO | NMG

The proportion of domestic debt held in short-term Treasury bills has fallen to the lowest level in nearly four years, data from the Central Bank of Kenya (CBK) shows.

Treasury bills accounted for 30.42 per cent of the entire government domestic debt as at December 20, a level last seen on April 26, 2016, when it stood at 30.1 per cent.

As of December 20, this amounted to Sh889.18 billion out of a total domestic debt of Sh2.923 trillion.

The CBK data shows that the proportion was at its highest at 38.2 per cent on October 18, 2018, with the amount standing at Sh966.37 billion at a time when the total domestic debt was Sh2.53 trillion. Bonds now account for 66.73 percent of domestic debt, compared to 60.6 percent in October 2018.

Another debt is in the form of a Treasury overdraft at CBK and advances from commercial banks, amounting to less than three percent of total debt.

At the beginning of 2019, the proportion of T-bills stood at 35.8 per cent, signalling that the government has had increasingly lowered its rollovers of existing shorter-dated instruments.

The fall to 30.42 per cent brings the short-dated treasury securities closer to the level that the State has long desired — but rarely achieved — as stated in successive Treasury debt management documents.

The Treasury has had the aim of keeping the short-term paper at no more than 30 per cent of the total domestic debt and the longer-dated Treasury bonds constituting at least 70 per cent of the total to reduce the repayment amount on a long-term basis.

In some years, the Treasury has recommended even lower thresholds for T-bills (20 per cent) and higher thresholds for t-bonds (80 per cent) as was the case for the 2016/17 fiscal year.