Eurobond 'noise' may raise Kenya's risk profile: Rotich

Monday January 25 2016

National Treasury Cabinet Secretary Henry Rotich. Mr Rotich has been mumbling something about complex accounting procedures for months now without mentioning a single infrastructure project that was funded by the Eurobond money. PHOTO | SALATON NJAU |

National Treasury Cabinet Secretary Henry Rotich. PHOTO | SALATON NJAU | NATION MEDIA GROUP 

By BRIAN NGUGI
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Accusations over the alleged misuse of the Sh250 billion Eurobond proceeds could damage Kenya’s financial reputation, Treasury has warned.

Treasury Secretary Henry Rotich said Kenyans could pay more for future Eurobond-type loans, in higher premiums.

“The premiums for future bond issuances may just be higher. This is the cost Kenyans will have to pay for the damage we are doing,” said Mr Rotich in Nairobi on the side lines of the First International Islamic Finance Conference for Africa.

“The hullabaloo about the allegations of misuse is just unfortunate and the media should be careful on the reporting of the same,” he added.

Mr Rotich spoke in the wake of sustained calls for accountability on the part of Treasury on how proceeds from the loan were spent.

Treasury has provided what it says is satisfactory information on Government’s spending of the Eurobond proceeds but the Opposition has for weeks on end poked holes into Treasury’s documents.

Accounted for

On Thursday last week Cord leader Mr Raila Odinga renewed claims of what he termed as an elaborate scheme to defraud Kenyans of the Eurobond proceeds terming the saga, “the worst in Kenya’s history.”

Kenya in June 2014 issued a US$ 2.75 billion sovereign bond on the Irish Stock Exchange.

At the time President Uhuru Kenyatta declared that proceeds from the Eurobond would help reduce government borrowing from domestic markets, thereby helping drive down interest rates which will boost investment, spur economic growth and provide growth to our people.

The total amount of proceeds from the Sovereign Bond issued in June 2014 and the Tap Sales issued in December, 2014 amounted to Sh250 billion, part of which went to pay off a syndicated loan by Government.

The purpose for which the Sovereign Bond and the Tap Sales were issued according to Treasury included to diversify Kenya’s external sources of funding government programmes and projects, to achieve lower interest rates, build-up international reserves so as to stabilize the Kenya Shilling as well as inflation. The Opposition has claimed none of the above promises actualized.