Treasury has proposed that it take over the Central Bank of Kenya’s (CBK) role of selling government bonds and treasury bills as part of broader reforms to streamline debt operations while separating fiscal and monetary functions.
- •The CBK currently acts as the fiscal agent of the government and issues and manages T-bills and bonds.
- •If the proposal is approved, the Public Debt Management Office (PDMO) will administer government securities in terms of setting up the borrowing calendar and pricing of the debt.
- •The move, which seeks to further lower interest rates on government securities below the current 11%, in line with Treasury CS Mbadi’s agenda, is likely to face resistance from the CBK.
“Support for legal amendments to empower PDMO to perform its functions as Principal in issuance of Government securities,” the government said in the 2025 Medium Term Debt Management Strategy.
The Ministry of Finance also expressed concerns, suggesting that they were not in direct control of public debt auctions and cannot be held accountable entirely.
“Consolidate auction functions under PDMO as the Principal in domestic debt borrowing and not under a committee -to make PDMO more accountable in public debt issuance,” Treasury added.
As of 14th January 2025, Kenya’s domestic debt stood at KSh 5.9 trillion with treasury bonds accounting for 85.5% of the total and treasury bills accounting for 14.8%.
In the 2025 Medium Term Debt Management Strategy, the government also fronted plans to phase out the 364-day treasury bills and issue Kenyan Shilling denominated bonds targeting offshore markets.
While the treasury decides on the debt size, the CBK handles pricing of individual debt auctions in consultation with the PDMO. “The Central Bank of Kenya in its capacity as fiscal agent is assigned the function to administer the domestic public debt including issuance of, payment of a return on, and redemption of, Treasury bills and bonds and other securities of the government in close consultation with the Public Debt Management Office,” The Treasury wrote on their official website.