The bullish shilling has cut Kenya's debt by Sh1 trillion and is expected to slash electricity and fuel prices, Central Bank of Kenya governor Kamau Thugge has said.
Speaking at the post-Monetary Policy Committee Meeting (MPC) media briefing, the apex bank boss attributed the yields to the country's decision to buyback the $2 billion inaugural Eurobond taken in 2014.
The storm is now over for the shilling and the country is reaping dividends. So far, the shilling has appreciated by 30 units against the US dollar since February.
"When a shilling gains by a unit against the greenback, our external debt drops by Sh40 billion. We are now at 30 units tops, slashing the debt by at least Sh1 trillion,'' Thugge said.
The country's total public debt is currently at Sh11.2 trillion, with external debt standing at Sh6.1 trillion while the domestic one is at Sh5.1 trillion.
The shilling traded at Sh131.16 against the US dollar by close of market Thursday. The local currency dropped to a low of Sh163 in early February.
On February 12, Kenya tapped the international bond market to raise cash and buy back a 10-year Eurobond of $2 billion that matures in June this year.
The $1.5 billion bond, which will mature in 2031, was oversubscribed four times. While the 10.375 per cent yield at issue was lower than the expected 11 per cent, the clearing of the debt eased intense pressure on local currency, which had been tipped to hit 200 units against the dollar.
"The impact of appreciating shilling goes beyond money markets. It is eased the cost of living in the country, with electricity cost and pump prices expected to drop further,'' Thugge said.
