Kenya’s government has lowered the use of an emergency loan facility at the Central Bank of Kenya (CBK) to fund crucial state expenditures.
The move reveals easing cash flow pressures in the first month of implementation of President William Ruto’s first full-year budget.
Outstanding overdraft declined to 48.18 billion shillings ($335.8 million) in the week of July, Business Daily newspaper reported, citing the latest Central Bank of Kenya report, the lowest since 34.32 billion shillings for the week ended January 20.
Despite higher interest costs, the improved performance in domestic borrowing helped ease liquidity bottlenecks for the government, lowering the need to use the emergency loan facility at the CBK.
The treasury raised 82.01 billion from bond auctions against a target of 60 billion shillings in July, the CBK data showed, compared with 15.72 billion in the same month last year.
The overdraft facility is a temporary source of cash to cater for priority payments and emergencies. It is usually tapped by the treasury when revenue streams such as tax receipts and borrowing fail to match expenditure needs.