Market News

By Eric Ombok

(Bloomberg) -- Kenya’s Treasury called for more discipline in the use of public resources because of the high level of domestic interest rates that make borrowing expensive.

The government is currently paying more than 15% for three-month Treasury bills and almost 18% for longer tenors. While the rates have eased since the central bank lowered its benchmark interest rate last month, they remain about three times higher than the cost of foreign loans, Treasury Secretary John Mbadi said.

“We just need to be disciplined in our use of public resources,” he said in a speech at an event hosted by the Nairobi Securities Exchange in the Kenyan capital on Thursday. “We must ensure that we don’t borrow expensively. We will still borrow.”

The East Africa nation is hard-pressed to keep borrowing at a minimum following deadly anti-government protests earlier this year against excessive taxation, corruption and wasteful spending by the state.

“We just need to be disciplined in our use of public resources,” Mbadi said. “We must eliminate theft.”

Locked out of foreign markets, the Treasury will have to rely on domestic loans as it awaits the latest disbursement from an International Monetary Fund program. It’s been forced to widen its budget-financing gap by 28% this fiscal year after abandoning tax measures following the protests in June and July.