Numbers and Accounts Behind the Eurobond Fiasco

By Soko Directory Team / Published December 21, 2015 | 1:27 pm



Eurobond

Someone said that numbers do not lie. Another one chipped in and said that where there is smoke, most certainly there is fire. This is the case with the Kenyan Eurobond issue.

There has been reports that there are three different accounts published by the government of Kenya showing how the billions from the Eurobond have been utilized in the country. According to the reports, two of this published accounts are not straightforward concerning how the billions were used. The following is a glimpse of the accounts and the numbers in them.

Public statement account.

According to this account, at the end of the financial year 2013-2014, the government had a debt of 1,226 billion shillings that it owed domestic lenders but had deposits amounting to 266.3 billion shillings bringing the debt down to 960 billion shillings.

Out of the 266.3 billion shilling deposits, 140.5 billion shillings were from the Eurobond cash at the end of the month of June that year as well as other unspecified deposits of 215.8 billion shillings.

As the financial year 2014-2015 came to an end, the government of Kenya had a debt of 1,353.5 billion shillings. At the same time, the government had deposits of 140 billion shillings hence bringing the net debt down to 1211.2 billion shillings.

Offshore Account

As the month of June came to an end, the total amount in the offshore account was 175 billion shillings.

According to the Central Bank foreign exchange reserves, the 175 billion shillings is reflected. During the month of July 3th, the government of Kenya withdrew $1 billion from the offshore account in two phases, 53 billion shillings or $604.6 million to pay off a loan.

The balance after the withdrawal was 88.5 billion shillings in this account. The Treasury says that the government closed the month with 140.5 billion shillings Eurobond cash which does not add up. If we were to go by the figures, the government should have closed the month with 175 billion shillings but not 140.5 billion shillings.

The National Treasury released figures that showed that 35 billion shillings were transferred to the Exchequer account on the 3th of July but interestingly, only 25 billion shillings are the one that are reflected in the 2013-2014 financial year in the cash released to the ministries. Where is the ten billion?

The Central Bank account

The Central Bank account is the one that gives some light. This is perhaps this account largely operates on recorded transactions.

According to this account, the government had borrowed 201.7 billion shillings in the 2013-2014 financial year with the deposits being 28.4 billion shillings.

These deposits were 9.9 billion shillings in the Central Bank and 18.4 billion in the commercial banks’ accounts.

The overdraft of the government at the Central Bank was 30.2 billion shillings. During the 2014-2015 financial year first quarter, the deposits of the government at the Central Bank stood at 45 billion shillings.

According to this account, the Eurobond cash jetted in during the first half of the 2014-2015 financial year. The account also indicates that the government borrowed heavily from the domestic market at the end of the year.

If the Eurobond was in, why was the government heavily borrowing from the local market?

To the deposits of the government, the 175 billion shillings are not reflected but only mentioned in the Central Bank of Kenya’s foreign exchange reserves. What is the reason for this?

Here is the problem now. The Central Bank account contrast sharply with the public statement one. The public statement one indicate that 140.5 billion shillings from the Eurobond were deposited at the end of the month of June in the year 2014 with a domestic borrowing of 110 billion shillings. This is not in the Central Bank of Kenya. Have you seen the difference? Now we do not know if it is 251 billion shillings that were borrowed or 110 billion shillings.

Keep it right here more numbers on the issue.


Article by Juma Fred.

 





About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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