This archive report was first published on 17 November 2019.
On November 17, 2019, the National Treasury building in Nairobi. FILE PHOTO | NMG
The National Treasury is poised to revise its domestic borrowing target upwards for the current fiscal year, following a strong start in the first quarter despite a shortfall in tax revenue collection.
According to analysts at Sterling Capital, the Treasury's net domestic borrowing target for the year stands at Sh306.8 billion, coupled with internal debt redemptions (roll-overs) of Sh122.6 billion.
Analysts at Sterling Capital noted that the Treasury had already borrowed a third of its total target in the first three months of the fiscal year, raising Sh144.1 billion from the domestic debt market, equivalent to 33.6 percent of the total target.
However, tax revenue performance lagged the quarterly expectations, standing at Sh372.3 billion, equivalent to 20.6 percent of the full year target of Sh1.807 trillion.
During the rate cap era, the government was able to borrow relatively cheaply from the domestic market as yields fell due to banks turning to government securities after shunning customer lending.
With the rate cap era now behind us, lenders are expected to push up customer loans, forcing the government to offer higher rates on its papers in order to compete for money.
