2010年-世界发展银行全球_Republic_of_Kenya___Medium_Term_Debt_Management_Strategy_201011-201213_50页_1mb

Summary of Kenya's 2010 Medium Term Debt Management Strategy

Core Content

The 2010 Medium Term Debt Strategy (MTDS) is a comprehensive framework for managing Kenya's public debt, aligned with the country's fiscal and economic recovery efforts. It aims to ensure that government borrowing is done at the lowest cost with a prudent level of risk, while also enhancing transparency and market development. The strategy is integrated into the government's annual budget process and is intended to be updated regularly.

Main Objectives

• Finance government requirements at the least cost with a prudent risk profile.
• Facilitate access to financial markets.
• Support the development of a vibrant domestic debt market.
• Ensure debt sustainability and reduce refinancing risk.
• Promote investor confidence and market liquidity.

Key Points from the Document

1. 2009 MTDS Overview

• The 2009 MTDS was the first formal and explicit debt strategy published in June 2009.
• It aimed to minimize cost and risk by shifting the debt mix to long-term domestic debt and reducing reliance on external financing.
• The strategy targeted a 30:70 ratio of external to domestic financing, with a focus on benchmark bonds and longer maturities.
• The net domestic borrowing was initially planned at 4.3% of GDP, but actual borrowing reached 5.1% due to revenue shortfalls and unexpected expenditures.

2. Outcomes of the 2009 MTDS

• The domestic debt market responded positively to the strategy, with increased liquidity and market activity.
• The average time to maturity of domestic debt increased from 3.8 years to 5.5 years by end-June 2010.
• The refinancing risk fell from 40% to 28%.
• The interest rate remained stable at 6.1% of GDP, with a slight increase in the cost of domestic debt due to higher borrowing volumes.

3. Key Developments Since 2009 MTDS

• Domestic Market Growth:

  • Increased activity in the horizontal repo market.
  • More frequent bond re-issues and introduction of 364-day Treasury bills.
  • Implementation of an Automated Trading System (ATS) improved settlement times to T + 3.
  • Corporate IFBs (Infrastructure Bonds) were introduced, especially by KenGen, which boosted market confidence and liquidity.

• External Sector Challenges:

  • New external financing came with harder terms, closer to 35% concessionality.
  • The self-imposed 35% grant element on external borrowing has become a negotiating challenge.
  • Guarantee demand increased, particularly for Public Private Partnerships (PPPs).
  • International capital market access was considered but remained informal discussion.

4. Debt Portfolio Characteristics (End June 2010)

• Total public debt: Ksh 1,055.2 billion or 42.6% of GDP.
• Domestic debt accounts for 50% of total debt, with external debt at 49%.
• Average time to maturity: 5.5 years (domestic), 8.9 years (total).
• Refinancing risk: 28% of domestic debt falls due within 12 months.
• Average interest rate: 6.1% of GDP (provisional).

5. 2010 MTDS Strategy Evaluation

• Four alternative strategies were evaluated against the 2009 MTDS:

  • S1: Original 2009 MTDS.
  • S2: Continued bias towards medium-term debt.
  • S3: Aggressive shift to external official sector borrowing and long-term domestic debt.
  • S4: Shift away from medium-term debt towards shorter and longer-term debt.
  • S5: Increased exposure to international capital markets.

• S3 was found to be the most cost-effective and least risky.

• S1 underperformed in terms of cost and risk.

• S4 had higher refinancing risk and lower demand for IFBs, potentially leading to a loss of retail investors.

• S5 was more costly but lower risk, though it increased exchange rate exposure and risk of NPV of Debt/GDP exceeding 40%.

6. Strategic Considerations

• The Government is concerned about the pace of domestic debt growth and its potential to crowd out the private sector.
• There is a risk of exchange rate shocks affecting the NPV of Debt/GDP, which could lead to external vulnerabilities.
• The strategy emphasizes regular monitoring of key indicators such as interest/GDP and NPV of Debt/GDP.
• Transparency and regular publication of debt-related indicators are critical for investor confidence and fiscal stability.

7. Implementation Plan

• The 2010 MTDS will be published annually alongside the Annual Budget.
• The Government will monitor macroeconomic indicators and interest rates to ensure the strategy remains on track.
• Steps will be taken to enhance the predictability of external borrowing and monitor guarantees and contingent liabilities.
• The ePROMIS system is expected to improve information flow and timeliness in tracking external disbursements.
• The capacity building in debt management has been supported by Commonwealth Secretariat, IMF, and World Bank.

Key Information

• Total public debt at end-June 2010: Ksh 1,055.2 billion or 42.6% of GDP.
• Domestic debt increased to 50% of total debt, up from 49% in FY2008/09.
• Refinancing risk decreased from 40% to 28%.
• Interest rate averaged 6.1% of GDP.
• 2009 MTDS had a positive impact on market development and liquidity.
• The 2010 MTDS focuses on balancing cost and risk, monitoring macroeconomic indicators, and ensuring debt sustainability.
• Guarantees and contingent liabilities are being closely monitored, especially in the context of PPPs and investment risks.

Conclusion

The 2010 MTDS builds on the success of the 2009 strategy, with a focus on refinancing risk mitigation, market development, and debt sustainability. It emphasizes transparency, predictability, and long-term planning in debt management. The Government remains committed to updating the strategy annually and enhancing its credibility through institutional reforms and capacity building.