State 'seeking options' after freeze on bond
The government had hoped to raise Sh33 billion through the sovereign bond. Central Bank of Kenya. Photo/FILE
The Treasury is sourcing for alternative funds to replace the delayed issuance of sovereign bond.
In a statement sent to newsrooms at the end of the week, the government also said that it would execute the current budget without proceeds from the privatisation deals.
“Efforts are at an advance stage to secure alternative funding to replace the delayed issuance of the sovereign bond following recent developments in the international financial markets,” read the statement in part.
The government had hoped to raise Sh33 billion through the sovereign bond.
However, prevailing volatility in world markets led to the shelving of the plans late last year.
Locally, Treasury launched a Sh18.5 billion, 12-year infrastructure bond last week to meet various pre-defined projects across the Water, Energy and Roads ministries.
The reaction from Treasury comes at a time when the government and the media have been at loggerheads as to the financing of the Sh127 billion-budget deficit. Among the contentious areas is the role of privatisation proceeds.
In its budget reading for the current financial year, the government had indicated it expected Sh8 billion from the deals.
And in an effort seen by economic analysts as a step for to the target, the Cabinet last December approved the sale of 15 state owned companies.
“The insinuation that the government is banking on privatisation [proceeds] to tackle its ballooning budget deficit is not also true. The main objective for privatisation is not to finance government operations but to improve accountability and efficiency in the management of parastatals,” read the statement.
And in attempts aimed at asserting its position as regards privatisation, the department added that “Indeed, through these combined measures, and further rationalisation of expenditures, we expect to execute the 2008/09 budget smoothly even without any privatisation proceeds.”
The statement seems meant to counter claims that the government will not manage to plug the budget deficit.
