Money Markets
By CHARLES MWANIKI
In Summary
- The Nairobi urban commuter railway and Lamu Port are among the key projects earmarked for funding out of the Sh176 billion ($2 billion) Eurobond issue.
- The successful Eurobond issue is also likely to be felt by the private sector through cheaper access to credit as the government reviews downwards domestic borrowing in the next financial year.
- Treasury has also set out a series of new policy measures to control bank lending rates, through the Kenya Banks Reference Rate (KBRR) and full disclosure of bank charges through introduction of Annual Percentage Rate (APR).
The Nairobi urban commuter railway and Lamu Port are
among the key projects earmarked for funding out of the Sh176 billion
($2 billion) Eurobond issue.
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President Uhuru Kenyatta said Wednesday that the money,
which was deposited in the Treasury’s account on Tuesday, will go
towards funding infrastructure projects in agriculture, transport and
energy.
“There are many projects in the energy sector that
we are planning to use these resources for, particularly in transmission
lines and also generation and drilling of geothermal projects,” said
President Kenyatta.
In the energy sector, emphasis will be put on
expanding transmission lines, and exploration and drilling of geothermal
wells in line with a target to generate 5,000 megawatts by 2017.
The dredging of the Lamu Port would signal the
start of the Lamu Port South Sudan Ethiopia Transport (Lapsset)
corridor. While roads will also be supported by the proceeds, a line
linking the city centre to the Jomo Kenyatta International Airport will
be a priority.
“We are planning to start off the Lamu Port with
the dredging of three berths, and the urban commuter rail, which is
important in decongesting Nairobi and providing the link between JKIA
and the city centre,” President Kenyatta added.
In the agriculture sector, funding will go towards the one million acre Galana irrigation project.
Treasury secretary Henry Rotich said the government
had ratified the work plans for implementing agencies in a bid to
address absorption constraints that delay development projects.
“The work and procurement plans were discussed last
week. They are now ready and will be finalised in a week’s time. From
July 1, there is no reason why ministries would not be able to implement
their programmes,” said Mr Rotich.
He said that the old policy of waiting until
respective ministry budgets were approved in Parliament before
preparation of procurement plans meant that some ministries would only
begin implementing their programmes in the middle of the financial year.
The successful Eurobond issue is also likely to be
felt by the private sector through cheaper access to credit as the
government reviews downwards domestic borrowing in the next financial
year.
The private sector would also use the Eurobond rates as a benchmark when borrowing offshore.
“By accessing these external funds we will reduce
government borrowing from the domestic markets, thereby helping drive
down interest rates which should boost investment and spur economic
growth,” said the President.
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