The Ministry of Finance is set to take over the role of the Central Bank of Kenya (CBK) in selling government bonds and mortgages as part of a broader reform aimed at improving business finance and separating capital from finance.
Banks now act as financial intermediaries for the government, issuing and managing financial invoices and contracts.
If approved, government securities will be managed by the Public Financial Management Office (PDMO) in line with the structure of loans and debt.
The move, which aims to further reduce interest rates on government bonds below the current 11%, is in line with Finance Minister CS Mbadi’s agenda but is likely to face opposition from the bank’s bank account.
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The government, in its 2025 Central Bank Debt Management Strategy, said it “supports legislative changes that will enable the PDMO to fulfil its functions as a public safety institution.” The Treasury also voiced concerns, saying they do not directly manage the public debt and therefore cannot take full responsibility.
“The competition role will be given to the Public Debt Management Office (PDMO) as the primary responsibility for local lending, instead of the committee, which will give the PDMO a greater role in accounting for the public debt,” the Treasury said.
As of January 14, 2025, Kenya’s domestic debt stood at 5.9 trillion Kenyan shillings, with government revenues accounting for 85.5% of the total debt and savings accounting for 14.8%.
In its medium-term debt management strategy for 2025, the government also announced plans to issue 364-day Treasury bills and Kenyan shilling-denominated bonds for overseas financing.
The Treasury is responsible for determining the amount of the debt, while the Central Bank is responsible for the amount of the one-off competitive fees in consultation with the PDMO.
