THE NATIONAL TREASURY

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1 REPUBLIC OF KENYA THE NATIONAL TREASURY MONTHLY DEBT BULLETIN JUNE 2014

1.0 PUBLIC DEBT 1.1 Introduction As at nd Jun 2014, public and publicly guarantd dbt stood at Kshs 2,422.83 billion or 58.2 prcnt of GDP (s Tabl 1). Th incras of 10.

2 1.0 PUBLIC DEBT 1.1 Introduction As at nd Jun 2014, public and publicly guarantd dbt stood at Kshs 2, billion or 58.2 prcnt of GDP (s Tabl 1). Th incras of 10.6 prcnt ovr th nd May 2014 position is attributd to incras in both domstic and xtrnal dbt. Gross domstic dbt incrasd by Ksh billion to stand at Ksh 1, billion, whil xtrnal dbt incrasd by Ksh billion to stand at Ksh 1, billion in Jun (S Tabl 1). Tabl 1: Siz of public dbt, nd Jun 2014, in billion Dbt Catgory Kshs USD Domstic Dbt 1, Extrnal Dbt 1, Total 2, and Cntral Bank of Knya Th structur of public and publicly guarantd dbt shows that 53.0 prcnt of th total dbt is domstic dbt whil 47.0 prcnt is xtrnal dbt as shown in Chart 1. Chart 1: Composition of public dbt Extrnal Dbt 47.0% Domstic Dbt 53.0% 1.2 Cost/Risk Charactristics of Public Dbt Rflcting Govrnmnt xtrnal dbt stratgy of contracting or guaranting xtrnal loans with highly concssional trms to minimis intrst rat cost, th avrag intrst rat and grac priod on th xtrnal dbt portfolio was 2.6 prcnt and 6.2 yars, rspctivly. In addition, th avrag maturity priod for xtrnal loans was 18.1 yars whil th avrag grant lmnt was 63.9 prcnt. As an indication of th succss in th lngthning of maturity structur of domstic dbt to minimis rfinancing risk in lin with th Mdium Trm Dbt Stratgy, th avrag maturity profil of outstanding Govrnmnt domstic dbt stood at 4 yars 9 months as at nd Jun Pag 1 of 14

3 1.3 Movmnt in Exchang Rats Tabl 2 shows markt indicativ nd-month forign xchang rats for th priod April to Jun During this priod, th Knya shilling dprciatd against th Strling Pound, US Dollar and Japans Yn by 2.09, 0.87 and 1.87 prcnt rspctivly. It apprciatd against th Euro by 0.39 prcnt. Th shilling stood at Kshs to th US Dollar at nd of Jun Tabl 2: Movmnt in xchang rats C ur rn cy U S D ollar STG P ound Euro JPY(100) A pril May Jun So urc: Cntra l Ba nk of K ny a Chart 2 shows th trnds in daily xchang rats btwn Knya Shilling and th four major forign currncis from Fbruary 2014 to Jun Th xchang rat against th four major currncis dpictd a mor stabl movmnt during th month of Jun Chart 2: Knya Shilling Exchang Rat GBP E x c h a n g EURO R a t s 90.0 JPY USD 80.0 Pag 2 of 14

4 2.0 EXTERNAL DEBT 2.1 Siz of Public and Publicly Guarantd Extrnal Dbt Ovrall, public and publicly guarantd xtrnal dbt incrasd by Kshs billion as at nd Jun 2014 to Kshs 1, billion from Kshs billion at th nd of May 2014 as shown in Tabl 3. Tabl 3: Extrnal dbt stock, in billions This incras is attributd to disbursmnts from IDA, China and th issuanc of th Intrnational Sovrign Bond. Chart 3 blow indicats th currncy composition of xtrnal dbt, and it shows that th US Dollar forms th largst shar of th xtrnal dbt portfolio at 42.7 prcnt followd by th Euro at 28.5 prcnt. Chart 3. Currncy Composition May 2014 Jun 2014 Kshs USD Kshs USD Bilatral Multilatral Guarantd Othrs Commrcial Banks Total , P o u n d S t r l i n g 4. 7 % J a p a n s Y n % E u r o % O t h r s 7. 7 % U. S. D o l l a r % Y u a n 4. 8 % 2.2 Structur of Extrnal Dbt by Crditor Official crditors account for prcnt of th total public and publicly guarantd xtrnal dbt, out of which dbt owd to multilatral crditors amounts to Ksh billion (including Ksh 3.94 billion guarantd dbt owd to IDA) dominats th portfolio at prcnt of th total. Bilatral dbt stands at Kshs billion (25.46 prcnt of th total), inclusiv of Kshs billion guarantd dbt, as shown in Chart 4 and Annx 1. In th multilatral catgory, IDA, ADB/ADF, IMF and EEC/EIB account for th largst proportion of xtrnal crdit, whil China, Franc and Japan ar th lading crditors in th bilatral catgory. Th Commrcial dbt constituts prcnt of th total public and publicly guarantd xtrnal dbt. Th incras in th commrcial dbt portion is attributd to th issuanc of th Intrnational Sovrign Bond in Jun Pag 3 of 14

Chart 4: Extrnal Dbt by Crditor 65.0 62.2 61.9 62.2 52.5 55.0 P r c n t a g 45.0 35.0 30.2 30.1 29.9 25.5 25.0 20.6 15.0 6.3 5.0 6.2 1.7 Mar-14-5.0 6.2 1.7 1.5 Apr-14 Bilatral Multilatral 1.

5 Chart 4: Extrnal Dbt by Crditor P r c n t a g Mar Apr-14 Bilatral Multilatral 1.5 May-14 Othrs Jun-14 Commrcial Banks 2.3 Extrnal Dbt by Sctor Chart 5 blow illustrats how th outstanding xtrnal dbt is shard among th conomic and social sctors of th conomy. Chart 5: Extrnal Dbt Shar by Sctors D I S B U R S E D O U T S T A N D I N G D E B T HE A LT H E D U C A T IO N A GRI C E NE R GY, IN F R A & I C T GE N E R A L EC O N O M IC C O M M E R C IA L L A B O U R A F F A IR S P U B LI C AD M IN IS T R A T IO N & IN T E R N A T IO N A L R E L AT IO N S E N V IR O N M E N T AL P R O T E C T IO N, W A T ER AN D H O U S IN G Pag 4 of 14

6 2.4 Projctd Cumulativ Extrnal Dbt Srvic Projctd cumulativ xtrnal dbt srvic for th priod to nd Jun 2014 stood at Kshs billion. Principal and intrst projctions for th month of Jun 2014 was Kshs million and Kshs 1.31 million, rspctivly. Multilatral and bilatral crditors constitut 52.9 prcnt and 39.5 prcnt of th cumulativ projctd dbt srvic rspctivly during th priod undr rviw as shown in Tabl 4. Tabl 4: Projctd Cummulativ Extrnal Dbt Srvic as at nd of Jun 2014, in Kshs million Crditor catgory Principal Intrst Total Bilatral 17, , , Multilatral 13, , , Commrcial , , Total 30, , , Actual Cumulativ Extrnal Dbt Srvic Actual cumulativ dbt srvic as at nd Jun 2014 was Kshs 93.5 billion as shown in Tabl 5. Actual principal and intrst paymnts for th month of Jun 2014 was Kshs 2.78 billion and Kshs 1.26 billion rspctivly. Tabl 5: Actual cumulativ xtrnal dbt srvic as at nd of Jun 2014, in Kshs million Crdit catgory Principal Intrst Total Bilatral 14, , , Multilatrals 11, , , Commrcials , , Totals 26, , , Budgt Dviation Th actual cumulativ dbt srvic for Jun 2014 was blow th projctd dbt srvic by Kshs 2.46 billion and this is attributd to th xchang rat variations btwn th projctd and actual xchang rats. Pag 5 of 14

7 2.7 Guarantd Extrnal Dbt Undr th Public Financ Managmnt Act, 2012, th govrnmnt may issu guarants undr various conditions so long as it dos not xcd th statutory ciling st by Parliamnt which currntly stands at Kshs 200 billion. In th month of Jun 2014, th guarantd xtrnal dbt incrasd by Kshs million to Kshs billion from Ksh billion in May 2014 du to dprciation of xchang rats during th priod. Tabl 6: Guarantd outstanding dbt by crditor, in Kshs million Crditor April 2014 May 2014 Jun 2014 Japan 40, , , Canada U.S.A IDA (KR Concssionair) 3, , , Totals 44, , , Pag 6 of 14

8 3.0 DOMESTIC DEBT 3.1 Cntral Govrnmnt Domstic Dbt Govrnmnt nt domstic dbt incrasd by Kshs 7.2 billion to Kshs 1, billion in Jun 2014 from Kshs 1, billion in May 2014 du to incras in Govrnmnt gross dbt ovr th priod as indicatd in Tabl 7. Tabl 7: Govrnmnt domstic dbt, in Kshs billion April 2014 May 2014 Jun 2014 Gross domstic dbt 1, , , lss Govt. dposits at CBK Govt. dposits at commrcial banks Govt. advancs to parastatals Nt domstic dbt , , , Govrnmnt Domstic Borrowing During th month of Jun 2014, Govrnmnt scuritis worth Kshs billion wr advrtisd. Bids worth Kshs billion and billion wr rcivd for Trasury Bills and Trasury Bond during th month rspctivly. Succssful bids amountd to Kshs billion against rdmptions of Kshs billion laving xchqur with a surplus of Kshs billion. Tabl 8: Govrnmnt domstic borrowing, in Kshs million Trasury Bills Trasury Bonds Total Advrtisd 57,000 46, ,000 Bids rcivd 61,807 27,908 89,715 Succssful bids 57,823 26,792 84,615 (34,293) - (34,293) Rdmptions (c ost) Nt dom stic borrowing 23,530 26,792 50,322 Pag 7 of 14

Tabl 9: Domstic dbt instrumnts by holdr nd Jun 2014, in Kshs billion Instrumnt/Holdr Commrcial banks Non banks Cntral Bank of Knya Non rsidnts Total Trasury bonds 436.33 474.90 0.05 3.48 914.

9 Tabl 9: Domstic dbt instrumnts by holdr nd Jun 2014, in Kshs billion Instrumnt/Holdr Commrcial banks Non banks Cntral Bank of Knya Non rsidnts Total Trasury bonds Trasury bills Othrs Total , Prcntag Holding 48.1% 45.7% 5.1% 1.1% At th nd of Jun 2014, banks hld th largst proportion of th outstanding Govrnmnt dbt scuritis amounting to Kshs billion or 48.1 prcnt as shown in Tabl 9 and Chart 6. This prcntag constitut mostly Trasury Bonds and Bills. Th non banks catgory compriss non bank financial institutions, National Social Scurity Fund (NSSF), parastatals, insuranc companis, building socitis, pnsion funds and individuals. Th Non Banks hld Kshs billion or 45.7 prcnt whil th Govrnmnt dbt worth Kshs billion or 1.2 prcnt was hld by non rsidnts who invst through nomin accounts in th local banks. Kshs billion hld by Cntral Bank of Knya compriss th Govrnmnt ovrdraft and Rpo Trasury Bills usd for xcution of montary policy. Chart 6: Domstic dbt by holdr as at nd Jun 2014 Non rsidnts 1.1% Cntral Bank of Knya 5.1% Non banks 48.1% Commrcial banks 45.7% Pag 8 of 14

3.3 Domstic Dbt by Instrumnts Chart 7 shows th composition of th domstic dbt as at nd Jun 2014. 71.2 prcnt of Govrnmnt domstic dbt was in Trasury Bonds, 23.

10 3.3 Domstic Dbt by Instrumnts Chart 7 shows th composition of th domstic dbt as at nd Jun prcnt of Govrnmnt domstic dbt was in Trasury Bonds, 23.3 prcnt in Trasury Bills whil th balanc is mainly th Govrnmnt ovrdraft at th Cntral Bank of Knya. Th structur of th holding is consistnt with th dbt stratgy of holding mor domstic dbt on longr datd instrumnts to minimis rfinancing risk and promot dvlopmnt of domstic markts for Govrmnt scuritis. Chart 7: Domstic dbt by instrumnt 80.0% 71.2 P 70.0% r o p 60.0% o r t 50.0% i o n 40.0% ( )% % 20.0% % 0.0% Trasury Bond Trasury Bill Othrs Pag 9 of 14

11 3.4 Nt Domstic Financing Tabl 10 shows that as at nd Jun 2014, th nt domstic financing stood at Kshs billion. Tabl 10: Nt domstic financing, in Kshs billion Jun-2013 Jun Chang , (0.56) Trasury Bills Trasury Bonds Pr-1997 Govt. Ovrdraft dbt Othr of which Ovrdraft (from CBK) Govt. dposits Nt Domstic Crdit 3.5 Cumulativ Domstic Intrst Paymnts As at nd Jun 2014, Govrnmnt actual cumulativ domstic intrst paymnts stood at Kshs billion against th cumulativ projctd intrst paymnts of Kshs billion. Actual intrst paymnts on Trasury Bonds and Trasury Bills amountd to Kshs billion and Kshs billion rspctivly. Th varianc of Kshs 3.08 million is attributtd to a lowr actual intrst rats ralizd in th markt compard to th projctd intrst rats. Tabl 11: Domstic intrst paymnts, in Kshs million Typ of dbt Projctd Trasury bonds 88, Trasury bills 30, Ovrdraft 2, Pr-1997 ovrd raft dbt Totals 122, Actual 86, , , , , Varianc (1,839.78) (1,763.11) (3,081.11) Pag 10 of 14

12 3.6 Avrag Intrst rats for Trasury Bills Chart 8 shows th monthly trnds on avrag intrst rats for both th 91-day and 182-day Trasury Bills sinc January During th month of Jun 2014, th avrag intrst rats for th 91-day Trasury bills incrasd by 99 basis points to 9.81 prcnt from 8.82 prcnt in May 2014 and th 182-days Trasury bill incrasd by 70 basis point to pr cnt from 9.86 prcnt pr annum. 364-days Trasury bill rat stood at an avrag of prcnt pr annum in Jun Chart 8: Avrag intrst rats on Trasury Bills d a ys d a ys I n t r s t R a t P r io d 3.7 Yilds on Trasury Bonds Th Govrnmnt has bn implmnting a Bnchmark Bond programm to incras liquidity around slctd Bonds and promot scondary trading. On of th ky objctivs of th programm is to lowr both rfinancing risk and cost of borrowing by th Govrmnt. Tabl 12 shows th yilds on slctd bnchmark Trasury Bonds in th scondary markt as at nd Jun Tabl 12 :Yilds on slctd Trasury Bonds Tnur 2 YR 5 YR 10 YR 15 YR 20 YR 25 YR Rat (%) Sourc: Nairobi Scuritis Exchang (NSE) Pag 11 of 14

13 Chart 9: Scondary Markt yilds on slctd Trasury Bonds 14.0% R a t 12.0% s % 10.0% 2YR 5YR 10YR 15YR 20YR 25YR Tnur Pag 12 of 14

14 ANNEX 1: STOCK OF PUBLIC AND PUBLICLY GUARANTEED EXTERNAL DEBT BY SOURCE (IN KSHS MILLIONS) CREDITOR CENTRAL GO VERNMENT BILATERAL Stock at nd May 2014 AUSTRIA Stock at nd Jun 2014 Chang BELGIUM 8, , (100.91) CANADA 1, (1.94) DENMARK 1, , (0.05) FRANCE 60, , , GERMANY 26, , (9.03) ITALY 1, , JAPAN 43, , (307.77) NETHERLANDS 2, , UK 1, , USA 4, , (6.92) FINLAND PARIS CLUB OTHERS NON P ARIS CLUB o/w CHINA Sub total 6, , , , , , (50.77) 247, , , , , , , , (138.70) 366, , IFAD 10, , IMF 83, , MULTILATERAL ADB/AFDB EEC/EIB IDA OTHERS Sub total COMMERCIAL BANKS SUPPLIERS CREDIT Sub Total 9, , (8.69) 591, , , , , , , , , , ,093, , (0.68) 40, , (0.15) GUARANTEED DEBT CANADA JAPAN USA IDA (KR Concssionair) Sub Total GOK+ GUARANTEED TOTAL Sourc : Th National Tr asury Mmorandum itm Nominal GDP (in Kshs Billion) Sourc: QEBR March , , , (7.66) 45, , , ,138, ,611.50

15 Information in this publication may b rproducd without rstriction provid d that du acknowldgmnt of th so urc is mad. Enquiris covring th publication should b addrssd to: Th Dirctor, Dbt Managmnt Dpartmnt, Na tional Trasury 1st Floor, Trasury Building, Haramb Avnu P.O Box , Nairo bi, Knya Tl: (25 4) Fax: (254) dmd@trasury.go.k Pag 14 of 14

THE NATIONAL TREASURY

REPUBLIC OF KENYA THE NATIONAL TREASURY MONTHLY DEBT BULLETIN SEPTEMBER 2013 1.0 PUBLIC DEBT 1.1 Introduction As at nd Sptmbr 2013, public and publicly guarantd dbt stood at Kshs 2,057.43 billion or 56.2