JULISHA FINANCES- A Summary of Business News.
Kenya's Treasury is seeking to strip the Central Bank of Kenya (CBK) of its role in selling government bonds and Treasury bills.
The Cs John Mbadi led Ministry, is instead proposing that the Public Debt Management Office (PDMO), a Treasury department, takes over the issuance of government securities.
The move, which is likely to face resistance from CBK, aims to reduce the State's borrowing costs below 10 percent and would bring Kenya's system closer to the US model, where the Treasury handles government securities while the Federal Reserve focuses on monetary policy.
As of January 14, Kenya's domestic debt stood at Sh5.89 trillion, with Treasury bonds accounting for 85.25 percent (Sh4.88 trillion) and Treasury bills at 14.75 percent (Sh844.84 billion).
The Treasury plans to elevate the PDMO to a State Department with its own budget and greater autonomy in debt management, including the power to approve or reject loans and determine borrowing costs during primary auctions.
Central Bank of Kenya has already stopped using placing agents for selling government securities, eliminating the 0.15 percent commission previously paid to stockbrokers, custodian banks, and authorized securities dealers.
Will this centralization of debt issuance under the Treasury lead to more efficient borrowing, or could it potentially undermine the checks and balances necessary for sound fiscal management?.
