![Kenya goes slow on domestic borrowing after exceeding target](https://diasporamessenger.com/wp-content/uploads/2015/04/CENTRAL-BANK-OF-KENYA.jpg)
The Treasury has exceeded its domestic borrowing target a month early and will only take up additional funds from lenders to redeem maturing debt, Central Bank of Kenya (CBK) has said.
CBK governor Patrick Njoroge said earlier this week that they had taken up a total Sh282.1 billion in net borrowing from the domestic market, against a target of Sh268.7 billion, and would therefore be looking to reduce the net amount to match the target before June 30.
The announcement means that banks may be forced to increase lending to customers at least until the end of the fiscal year later this month, given that the government will only look to match maturities.
โBy May 28, we had borrowed a net of Sh282.1 billion, already higher than the latest target by Sh13 billion. For the next four auctions, we will on net reduce (the net borrowing) by that amountโฆWe have redemptions of about Sh100 billion in the period, so we will be putting out about Sh87 billion on gross borrowing,โ said Dr Njoroge.
He added that while there had been doubts from some market watchers that the government would be able to hit its domestic borrowing targetโ having been behind target for most of the first half of the fiscal yearโ they have been able to do it without distorting the yield curve.
The move by the Treasury to effectively close its books to additional domestic borrowing (bar money taken to roll over maturing debt) is likely to lead to rising liquidity in the money market, which could push interest rates lower.
This is likely to put some pressure on the shilling, which could result in the regulator coming in more to mop up liquidity through open market operations.
By CHARLES MWANIKI
Source-nation.co.ke