- Political opposition alleged Eurobond proceeds went missing
- Treasury says politicians are misreading government's accounts
Kenya may review its foreign-borrowing plans after facing questions from the main political opposition party that funds from last year’s Eurobond sale had gone missing.
The government of East Africa’s biggest economy is wary of politicians “misreading” the Treasury’s accounts, hurting efforts to raise more debt on international markets, according to Kamau Thugge, principal secretary of the department. The Treasury has said it has evidence to show that all the money from the $2.75 billion bond is accounted for.
“The issue has been politicized,” Thugge said in a phone interview on Dec. 3 from the capital, Nairobi. “We had factored in external commercial borrowing every year so we don’t crowd out the private sector from the domestic debt market. We now have to reassess if that can still be the position for the 2016-17 financial year.”
Kenya’s public prosecutor last week ordered police and anti-graft investigators to probe allegations that more than 140 billion shillings ($1.4 billion) of the Eurobond proceeds had gone missing, as alleged by the Coalition for Reforms and Democracy, known as CORD.
Thugge said the Treasury collected the equivalent of 250 billion shillings from the sale of the Eurobonds last year, from which it spent 53.3 billion shillings to pay a syndicated loan. The remaining funds were disbursed to ministries to finance projects over two financial years, he said.
The government had planned to plug the 2016-17 fiscal deficit with about 240 billion shillings of external borrowing, and about the same amount raised on the domestic debt market. The Treasury may raise its domestic-borrowing target by 20 percent to 265 billion shillings in a supplementary budget next year, according to Alexander Muiruri, head of fixed income at Kestrel Capital Ltd.
Thugge declined to say if the government plans to sell another Eurobond. Yields on the dollar-bond due June 2024 have climbed 134 basis points to 9.22 percent in the past month.
Raila Odinga, CORD leader and a former prime minister, was summoned by the anti-corruption agency to discuss his allegations, his party said in an e-mailed statement on Tuesday. He had previously turned down an invitation from the Treasury to scrutinize documents on the Eurobond and asked officials to instead make the paperwork public.