Government to Sell Bond Worth Ksh40 Billion
The Government of Kenya is looking for investors willing to buy a 15-year treasury bond before July 23.
It has indicated that they intend to use the funds in supporting the current country’s budget.
In the latest report, the Government seeks to raise KSh40 billion from selling the debt instrument. The bond is set to mature in July 2034.
The 2019/2020 budget has an estimated deficit of Sh607.8 billion, an increase from Sh562 billion this financial year.
The Government is aiming to collect KSh289 billion from the domestic sources in a bid to seal the budget gap.
Investors have a chance to buy the bond at a minimum price of KSh50,000. The market will determine interest on the debt product.
Ten percent withholding tax will be applied to the interest payments.
With the treasury hoping to collect Sh2.2 trillion, the Kenya Revenue Authority has set a target of approximately Sh1.9 trillion.
Experts say the Government might also heighten the tax regime to fill this budget deficit.
This year, the Government will likely raise Value Added Tax (VAT) from the current 16 percent and Capital Gains Tax, which targets the wealthy.