Eurobond 2.0

[hk]

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Kenya is going to issue another Eurobond next year https://www.bloomberg.com/news/articles/2017-11-27/kenya-is-said-to-seek-bank-proposals-for-2-billion-bond-sale . If the rates prevail at below 6% this makes sense. Kenya borrows about $8b annual, our funds utilization and absorption is low. That's why we have funds allocated to development that haven't been completed and we compound that with borrowing more money while treasury has funds lying idle. Other than paying syndicated banks loans, the Eurobond should also be ringfenced for specific projects. Also the government should in return reduce local borrowing apart from M-Akiba which is cheaper.

[bryan275]

This is why the presidency had to be "won" by hook and by crook.

[RV Pundit]

Yeap hope this time round they ring-fence it to development; we can have domestic borrowing for budgetary support but let us dollars for infrastructure.

[Kadudu]

Meza mate

This is why the presidency had to be "won" by hook and by crook.

[Empedocles]

Yeap hope this time round they ring-fence it to development; we can have domestic borrowing for budgetary support but let us dollars for infrastructure.

This is for the 2022 elections. 

[hk]

Yeap hope this time round they ring-fence it to development; we can have domestic borrowing for budgetary support but let us dollars for infrastructure.

This is for the 2022 elections. 

Kenya borrows more than $8b annual through treasury bonds,syndicated loans etc. Actually its much easier to steal that than Eurobonds. Government goes to market on a weekly bases.

[MOON Ki]

Kenya borrows more than $8b annual through treasury bonds,syndicated loans etc. Actually its much easier to steal that than Eurobonds. Government goes to market on a weekly bases.

I have to admit that I don't fully understand the flows of GoK money, so feel free to correct me on that.   As I understand it, all those monies end up at the CBK, from where they are doled out for various purposes; and when there is a difference between what is doled out and expenditure that can be explained, one may suspect theft.   So, why are the other monies easier to steal than Eurobonds?

[RV Pundit]

Because it doesn't involve lots of foreign regulators - who regulate international debt markets and the likes of Fed Reserve bank of the US. Like HK said - with or without Euorobond Rotich will borrow what the targeted to borrow. What is 2B dollars borrowed in 2014 in 2017? KRA collects about nearly 1.5B dollars every month!

Stealing eurobond and then laundering it is not easy task.

So, why are the other monies easier to steal than Eurobonds?

[MOON Ki]

Because it doesn't involve lots of foreign regulators - who regulate international debt markets and the likes of Fed Reserve bank of the US.

I know that foreign regulators are involved in international bonds. But what do they have to do with how the money is allegedly spent.  Even according to GoK's own account, and paperwork that purported to show it, the Eurobond 1.0 money was supposedly transferred to the CBK.   Once the money is in Kenyan hands, where do the foreign regulators come in?  How does the source of some money in the CBK make it any easier to steal some CBK monies but not others?  That is what I am trying to understand.

What is 2B dollars borrowed in 2014 in 2017? KRA collects about nearly 1.5B dollars every month!

 

I don't know "what" it is.   But as I understand it---and I cold be wrong---a substantial part of the reason for a new Eurobond is to pay for a syndicated loan that is now quite problematic.    Apparently KRA's "1.5B dollars every month" is not of much help with that.    When was that loan taken out?   What does it mean in 2017, especially with KRA apparently raking it in?   Perhaps you can help me with those ones too.

[vooke]

[MOON Ki]

the reluctance by CBK and then Rotich to account for expenditure. They had to be dragged to parliament and they kept on dithering and finally when Rotich gave a breakdown, it was only the beneficiary Ministries,and not specific projects.

The other reason was that the bond initially was touted and marketed as infrastructure and no projects have ever been adduced to date. Rotich later twisted it and claimed it was meant to plug budget deficits bla bla.

I know that story.  In fact, at the time that it was hot, I went to Treasury's website and read everything they had to offer by way of "explanations" and "supporting documents".   Before we go any further, let us start with my original question.  To simplify things, us suppose that the money went into CBK's accounts exactly as claimed. No foreign regulators and or anything else of the sort.  I then have two questions:

(a) Why would Eurobond money in CBK's accounts be more difficult to steal that any other government money that is lying in there?

(b) Regardless of the source, how can anyone determine that any government money has been stolen?

Thanks for your response so far.   I might have some "follow-up" questions later.

[Kim Jong-Un's Pajama Pants]

the reluctance by CBK and then Rotich to account for expenditure. They had to be dragged to parliament and they kept on dithering and finally when Rotich gave a breakdown, it was only the beneficiary Ministries,and not specific projects.

The other reason was that the bond initially was touted and marketed as infrastructure and no projects have ever been adduced to date. Rotich later twisted it and claimed it was meant to plug budget deficits bla bla.

I know that story.  In fact, at the time that it was hot, I went to Treasury's website and read everything they had to offer by way of "explanations" and "supporting documents".   Before we go any further, let us start with my original question.  To simplify things, us suppose that the money went into CBK's accounts exactly as claimed. No foreign regulators and or anything else of the sort.  I then have two questions:

(a) Why would Eurobond money in CBK's accounts be more difficult to steal that any other government money that is lying in there?

(b) Regardless of the source, how can anyone determine that any government money has been stolen?

Thanks for your response so far.   I might have some "follow-up" questions later.

I am also curious to see how that works.  When Eurobond comes up, accounting suddenly sounds like Bell's Theorem.

[vooke]

the reluctance by CBK and then Rotich to account for expenditure. They had to be dragged to parliament and they kept on dithering and finally when Rotich gave a breakdown, it was only the beneficiary Ministries,and not specific projects.

The other reason was that the bond initially was touted and marketed as infrastructure and no projects have ever been adduced to date. Rotich later twisted it and claimed it was meant to plug budget deficits bla bla.

I know that story.  In fact, at the time that it was hot, I went to Treasury's website and read everything they had to offer by way of "explanations" and "supporting documents".   Before we go any further, let us start with my original question.  To simplify things, us suppose that the money went into CBK's accounts exactly as claimed. No foreign regulators and or anything else of the sort.  I then have two questions:

(a) Why would Eurobond money in CBK's accounts be more difficult to steal that any other government money that is lying in there?

(b) Regardless of the source, how can anyone determine that any government money has been stolen?

Thanks for your response so far.   I might have some "follow-up" questions later.

[bryan275]

Meza mate

This is why the presidency had to be "won" by hook and by crook.

Huko people's Republic we'll eat healthy... Right now we're fasting in uhurustan

[hk]

 Eurobond wasn't ring-fenced for a specific project other than paying off syndicated loan of I think $750m. The remainder should have gone to consolidated account or CBK just like other funds. The key for me is Foreign currency reserve https://tradingeconomics.com/kenya/foreign-exchange-reserves , if there was a bump after influx of Euro bonds funds. Also did CBK use the funds to fight protect ksh. when other african currencies were collapsing.  If Euro was stolen I'd bet it was stolen after it got into the country.

[RV Pundit]

Precisely. CBK essentially bought most Eurobond from Treasury and kept it in their Feds Account to shore up Kshs. CBK then gave Treasury equivalent Kshs and deposited that into their consolidated (Kshs) account...which is held at CBK. From there you cannot tell what was Eurobond, what was collected by KRA, what was banked by ministries and agencies as AIA, and what donors dumped right in there. That was the end of Eurobond...Consolidated Account of Treasury at CBK. The Budget Controller then takes over and ensure the budget lines are financed.

Therefore when Ouko the Auditor and NASA bozo start asking for Eurobond...then you know they are playing politics. Once the money was put into Treasury Consolidated Account held at CBK...there is no telling where it went...it maybe paid salary, or repaid some old debt or financed some project. It was not ring-fenced for particular project.

Eurobond wasn't ring-fenced for a specific project other than paying off syndicated loan of I think $750m. The remainder should have gone to consolidated account or CBK just like other funds. The key for me is Foreign currency reserve https://tradingeconomics.com/kenya/foreign-exchange-reserves , if there was a bump after influx of Euro bonds funds. Also did CBK use the funds to fight protect ksh. when other african currencies were collapsing.  If Euro was stolen I'd bet it was stolen after it got into the country.