- The total revenue target, including collections by the Kenya Revenue Authority (KRA), has been set at Sh2.9 trillion, down from Sh3.3 trillion.
- Locally, investors are avoiding government papers, with the latest bonds and bills recording massive under subscriptions.
Image: FILE
A maze awaits President William Ruto's nominee for the National Treasury, John Mbadi if he survives the scrutiny by his peers in the Parliament.
Joining a government that is short on funds but pressed to deliver, Mbandi's will be a tough juggling act to keep the sheep afloat.
The Orange Democratic Movement ODM) chairman is set to replace economics professor Njuguna Ndung'u whose 18-month tenure encountered a sovereign debt default scare, unstable shilling, and low revenue collection.
A Master of Business Administration graduate from the University of Nairobi, Mbadi who chairs the Nationa; Assembly's Public Accounts Committee has been a sharp critic of the government's fiscal and economic policies.
With the shoe now on the other foot, he is tasked with Ruto's administration source funds to finance a Sh3.8 trillion budget for the current financial year after a public uproar forced the President to abandon the Finance Bill, 2024 that could have seen an extra Sh347 billion collected.
Early this month, Ruto announced a raft of austerity measures including merging state agencies with overlapping roles.
"The 47 state corporations with overlapping will be dissolved and their mandate transferred to ministries and state agencies," he said.
Ruto alluded to more borrowing to fill the over Sh700 billion budget deficit and Mbadi will have to pull a miracle to convince risk-averse lenders locally and internationally.
The total revenue target, including collections by the Kenya Revenue Authority (KRA), has been set at Sh2.9 trillion, down from Sh3.3 trillion.
Locally, investors are avoiding government papers, with the latest bonds and bills recording massive undersubscriptions.
Treasury bills were undersubscribed for a third week in a row, falling further to 32 percent from the 60 percent recorded the previous week.
Both the 182-day and 364-day papers witnessed shrunk subscription rates to 14.9 percent and 18.3 percent respectively.
Only short-term 91-day bills performed well, with the Central Bank of Kenya (CBK) accepting bids worth Sh6.1 billion out of the Sh7.7 billion received, reflecting a 79 percent acceptance rate.
In the early month tap sale of the Sh20 billion bond, the government only managed to collect Sh487.5 million the lowest under subscription recorded in the past five years.
Global rating agency, Moody's has downgraded Kenya's creditworthiness, setting up the country for higher interest rates or no loans at all.
The firm revised Kenya's local and foreign-currency long-term issuer ratings and foreign-currency senior unsecured debt ratings to Caa1 from B3, maintaining a negative outlook.
Caa1 depicts a junk rating which shows a country or organisation has a high chance of defaulting in case of any shocks.
Economic experts say that the downgrade has far-reaching implications on the financing of this year's budget, with lenders like the International Monetary Fund (IMF) delaying approval of much-needed disbursement.
The lender was to approve the last review of Kenya's $3.4 billion facility issued in 2021 in June. On Monday, Prime Cabinet Secretary Musalia Mudavadi said the lender will approve the funding next month.
Bandi equally faces the daunting task of clearing some of its maturing loans even as the country's total public debt hit the roof. CBK estimated it at Sh10.4 trillion on Friday in the weekly bulletin.
Economist Julie Mwai welcome Mbadi's appointment terming him as competent and a doer.
"He has the right competencies to lead structural changes at the exchequer. His political tag will however derail his service."