Kenya's Treasury cuts 2014/15 local borrowing by a quarter

 

 
NAIROBI (Reuters) - Kenya's Finance Ministry cut its domestic borrowing target this fiscal year by close to a quarter to 144.8 billion shillings ($1.58 billion), saying ......................................
projected revenue shortfalls and higher expenditure prevented a larger cut.
Finance Minister Henry Rotich had set a local borrowing target of 190.8 billion shillings in the budget last June but a revised budget policy statement issued on Wednesday showed the state would borrow a lower amount.
East Africa's biggest economy wants to cut local borrowing in order to lower domestic lending rates and stimulate growth.
The presidency said in August the country would reduce local borrowing by close to half, reflecting the government's desire for lower local interest rates.
"We are reducing it from 190 (billion shillings) to 144 (billion shillings. That (August) was even too early to project. This is the right time to revise," Rotich told Reuters by phone on Thursday from the World Economic Forum in Davos, Switzerland.
The Treasury said in the budget policy statement released on Wednesday that there was a projected revenue shortfall of 17.8 billion shillings in the current fiscal year that ends on June 30, due to sluggish collections of income, import and investment income taxes.
There were further funding needs that had not been budgeted for, thus limiting the local borrowing target cut, it said.
The local borrowing in this financial year represents 2.5 percent of GDP, down from 4.0 percent in the previous fiscal year, reflecting the impact of the government's issuance of the debut sovereign bond.
Kenya raised $2 billion via the Eurobond last June in two tranches of five and 10 years. It tapped the Eurobond market again last month by increasing the size of the debut bond by $750 million.
($1 = 91.7000 Kenyan shillings)