Kenya Says Sovereign Bond Won’t Hinder Efforts to Control Debt

Kenya’s plan to raise $1 billion on the overseas bond market doesn’t pose a risk to keeping public debt under control and within the legal target, Felister Kivisi, senior assistant director of debt management, said.

The government’s proposal to offer its maiden sovereign bond by end-September will “be well within the limit” for international borrowing, Kivisi said yesterday by phone from Nairobi, the capital.

The external debt stock held by Kenya stood at 789 billion shillings ($9.1 billion) at the end of May compared with a cap of 1.2 trillion shillings set by lawmakers, she said.

Kenyan efforts to cut “non-priority” spending and improve tax collection should help gradually reduce its debt levels, the International Monetary Fund said in February. Total public debt in East Africa’s largest economy is forecast to decline to 40.6 percent of gross domestic product in the fiscal year through June 2015 from an estimated 42.5 percent this year, according to the Washington-based fund. Net foreign financing will be 223 billion shillings in 2013-14, Treasury Secretary Henry Rotich said in June.

Kenya’s Parliamentary Budget Office forecast this week that external debt could reach 1.1 trillion shillings by the end of June 2014. The office was created in 2007 to boost scrutiny over the budget and economic management and its reports are meant to inform lawmakers, according to its website.

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