The government’s increased appetite for domestic borrowing will not crowd out businesses and households, Central Bank of Kenya (CBK) Governor Patrick Njoroge has said.
Dr Njoroge said the government has opted for bonds rather than Treasury bills (T-bills) due to their longer maturity dates.
“We are not concerned that the government is borrowing too much and, therefore, crowding out the private sector. Our programme shows that we can accommodate it quite comfortably. As a matter of fact, there is a lot of room in lending that can take place,” said the governor.
He spoke on Tuesday at the post-Monetary Policy Committee meeting, a day after the regulator’s top decision-making organ lowered the benchmark rate by 0.25 percentage points from 8.50 per cent, signaling cheaper loans.
There have been concerns over the government’s increased domestic borrowing at a time when the private sector is facing a cash crunch. Treasury Cabinet Secretary Ukur Yatani revised the estimates for domestic borrowing for this financial year to Sh514.03 billion, up from Sh429.3 billion.
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